Loss adjusters are losing the battle for direct regulation.

Speaking at the Cila conference, head of authorisation and supervision for the FSA high street firms division Shaun Mundy said, as loss adjusting is not covered in the EU's Insurance Mediation Directive, the Treasury must determine where loss adjusting fits in the regulatory regime.

"Our friends at the Treasury have not designated you as a professional body,"he said.

Mundy said when loss adjusters are acting for insurers they are excluded from FSA regulation and, as outsourced practitioners, would be regulated by insurers.

But Mundy said when loss adjusters were acting on the insured's behalf, and if they handled some of the claims administration, they could need to be FSA authorised.

He said once the Treasury clarifies the circumstances under which some loss adjusters would need to be regulated, the FSA will publish more detailed guidance.

Cila is lobbying for direct regulation because it is concerned that indirect regulation will lead to a raft of different rules and interpretations from insurers.

Outgoing Cila president George Moss said the institute is might admit corporate members, so as to bring loss adjusters that are not chartered into a regulatory framework.

Moss said Cila and the CII are to create a joint education standard, bringing together Cila's Society of Claims Technicians and the CII's Society of Technicians in Insurance.