With the Financial Services Authority's application threshold now passed, there is now no guarantee that those yet to apply will have their applications processed on time. However, Robin Gordon-Walker asserts that the FSA will strive to process late applications before the 14 January 2005 deadline
The Financial Services Authority recently published an update on the progress of the general insurance market towards authorisation as at 13 July. That date is significant because it marked the latest point at which the FSA could guarantee that it would conclude applications for authorisation ahead of 'GI Day' on 14 January 2005.
The data that was published showed that, by 13 July, the FSA had received 12 710 registrations from the general insurance sector requesting an application pack and 8624 applications for authorisation. Some 6230 registrations were received from the primary insurance market and 6480 from the secondary insurance market, effectively, those that sell general insurance products alongside other goods and services. For applications for authorisation, the estimated breakdown was 4843 from the primary insurance market and 3781 from the secondary insurance market.
Preparations in full swing
So, many firms are well advanced in their preparations for GI Day and the process of sending minded-to-authorise letters to successful applicant firms is also in full swing. The parallel process of sending variation-of-permission letters to already FSA-supervised firms that have successfully applied to conduct general insurance business in addition to their current regulated activities is also well under way.
Overall, this activity indicates that significant progress has been made since the general insurance authorisation process started earlier this year. The FSA is grateful for the co-operation received from the industry in helping it to take on the major, unprecedented task of bringing such a large constituency of new firms into regulation at one time.
However, many firms have yet to act and, now that the 13 July milestone has passed, it is evermore imperative that businesses that are involved in selling insurance should consider their options. This may particularly be the case with the secondary intermediary market, where there is evidence that many are less progressed in their preparations than the broker sector itself. If it has not already been done, an urgent check is required to determine whether a firm will need to be regulated. If this has already been done and it is known that the firm is involved in regulated activities but has not yet acted, a decision should be made on how to respond to regulation.
Many are choosing to apply to the FSA for direct authorisation; others are choosing to become the appointed representatives of principal firms that are already authorised by the FSA or of firms that are applying for principal status. And some may decide that they will change their activities to fall outside of regulation. These are all valid choices and they will depend on the commercial circumstances of the firms concerned. But, it is a decision that needs to be taken now if businesses are going to be ready for regulation.
Now that 13 July has passed, some firms have asked if it is too late to apply. The FSA's position is that, while that date was an important milestone as the latest by which it could guarantee to turn applications around before GI Day, the FSA will continue to deal with 'late' applications that come in from now on and will do its best to deal with them before GI Day. In many cases the FSA turns around authorisation applications in considerably less than six months - so firms who decide on the direct authorisation route should act now and submit their application as soon as possible. And, in case there is still any doubt on the issue, the date of 14 January 2005 is already fixed in law and there is no prospect of it being delayed or postponed to deal with very late applications or for any other reasons.
Ensuring that firms are ready for 14 January is a shared task. The overriding responsibility must rest with the business and, in particular, with its senior management. But firms that are already regulated by FSA, for example the insurance companies that underwrite policies, are also obligated to ensure the intermediaries they deal with are either regulated by the FSA or are appointed representatives where they need to be. Many of those now selling insurance may well find their product providers showing an interest in their preparations for regulation over the coming weeks and months. And the FSA also has a responsibility to ensure that firms have the information they need to prepare for regulation. Not only has the FSA's dedicated contact centre been providing information about the rules and the application process to affected firms since November 2003, its website www.fsa.gov.uk/mgi also provides a wealth of information for firms wanting to know whether they are affected and, if so, what they need to do.
The aim of the FSA is to deliver consistent and effective consumer protection supporting an efficient and competitive market. This involves a lot of adjusting to change for the FSA, for thousands of firms and for their customers. Much progress has been made and it will be necessary for everyone involved to maintain this focus to achieve maximum readiness for the new regime over the next six months.
- Roundtable: Is a single customer view taking off in insurance?
- O’Connor replaces Fairchild at the helm of Broker Network
- Analysis: The mystery of the missing Insurance Fraud Taskforce report
- Home insurance insurtech Buzzvault launches
- Travel insurtech Pluto begins beta test
- Green light for UK-US insurance trade deal
- Majority of customers support a ban on dual pricing