Insurance selling and administration: FSA’s high level approach to regulation

The Financial Services Authority recently published Consultation Paper 160: Insurance selling and administration: the FSA’s high-level approach to regulation. This is the first of a series of CPs that will define the shape and extent of FSA regulation of general insurance distribution, which is to take effect from January 2005. Philip Ryley, Solicitor and John Virgo, Barrister consider some of the key points that arise out of CP160.

HM Treasury first declared that the FSA would take over statutory regulation of general insurance on 12 December 2001. On 16 October 2002 the Treasury announced that general insurance regulation would come into force in October 2004 unless there was a significant delay in the publication of the European Union’s Insurance Mediation Directive (the IMD) in the Official Journal. The Directive was published in the Official Journal on 15 January 2003. Member states have two years from the date of publication to implement the IMD and as a result, on 11 February 2003, Ruth Kelly, the Financial Secretary to the Treasury, announced that general insurance regulation would now come into force on 14 January 2005 , to give the insurance industry sufficient time to prepare for this major change in regulation.The only exception is the regulation of long-term care insurance which will come into force on the earlier date of 31 October 2004 .The government has made long term care insurance an exception, simply because of the potential for consumer detriment that may arise from any further delay, and to meet the its earlier commitments to regulate long-term care insurance.