The FSA allows brokers to make other firms their Appointed Representative.
Appointed Representatives could be one of the biggest risks facing your business and one of the greatest challenges to demonstrating effective systems and controls.
The key issue to be aware of is that you take on responsibility for the Appointed Representative's compliance with FSA rules. Any rule breaches committed by the Appointed Representative will treated by the FSA as a breach by you.
What is the practical impact? If you fail to manage your representative's effectively, the FSA can prosecute you - resulting in a fine and bad publicity. For example, the FSA fined Interdependence Limited £125,000 for serious failings in the supervision of appointed representatives.
Iodem Solution has developed a new review programme to ensure that your business is managing its Appointed Representatives properly. In particular, we target the key risk areas of:
- compliance and the approach taken to supervision;
- managing client or insurers money;
- vetting procedures;
- training and competence;
- contracts between you and the Appointed Representative; and
- documented procedures and management information.
Contact Iodem today so that we can help you.
Published: February 2006
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The Financial Services Authority, the Government's super-regulator, has extended insurance regulation to firms which sell or administer general insurance products.
Regulation will not only cover policies like motor and home contents, but will also include consumer products like pet insurance and product warranties (e.g. from cars to double glazing). One of the key drivers behind the decision to regulate general insurance has been the need for the UK to comply with European legislation.
The new regulatory regime, applies not only to insurance brokers, but also to any individual or business which arranges or administers insurance as part of the service it gives its customers.
A large number of businesses that do not consider themselves part of the insurance industry are now faced with the prospect of direct government intervention into their businesses. No industry sectors are excluded. Businesses from surveyors to furniture removers, vets to property managers are amongst the sectors affected.
Iodem Solutions Limited, the North East's primary compliance and risk management consultants, have commissioned a survey to identify the impact of the Government's new regime on the North East. The results of the survey make disturbing reading for local businesses.
Report Findings
- 174 businesses across the North East took part in the survey. Nearly 80% of respondents were unaware of the new regulations.
- 75% of respondents felt that not providing insurance services would have an impact on their business leading to a reduction in profit/deterioration in service provided to customers.
- 81% were unaware of the cost associated with becoming FSA regulated. There are serious cost implications including application fees and the ongoing cost of complying with government regulations.
- 82% were not aware of the 14 Jan 2005 deadline. After this date businesses need to be regulated by the FSA or eligible for an exemption if they want to continue selling or administering insurance otherwise they could be committing a criminal offence and contracts which are entered into could become unenforceable. 82% of respondents were not aware of the consequences of non- registration.
Quotes
"The impact on small businesses of the new regulatory regime should not be underestimated. In many cases businesses will be faced with the stark choice of increased costs or loosing customers."
(Richard Tunnicliffe, Director)
"The cost to small businesses of complying with the new regulations will be high. Possibly for the first time, those caught by the new regime may be faced with the prospect of FSA oversight with all the practical implications that this may entail. Some may find this daunting."
(Janet Hawthorne, Director)"
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