Regulation doesn't affect me. That appears to be the view of many in the insurance industry. They hold the notion that if they are not the firm's compliance officer or a senior manager, the FSA's proposals can be ignored. But this is misconceived. Regulation will affect all broking staff.

Granted, the high-level decisions such as whether a firm is to become an appointed representative (AR) or whether a non-statutory trust account for client monies is to be used will be the realm of senior management. But the regulations will penetrate much deeper.

For instance, brokers who are advising customers will need to demonstrate that they have understood the needs of the client and made a proper search of the market for the most appropriate terms. Procedures will have to be followed and records kept.

Still think regulation doesn't affect you?

When the FSA begins its supervisory role, how broking staff conduct themselves will be vital. Mystery shoppers will be assessing whether the broker asks the right questions and explains the right terms, as required by the rules.

In this issue, solicitor Matthew Newman looks at how to ensure your agency agreement effects risk transfer. And Andrew Paddick casts a critical eye over the extention of the Financial Services Compensation Scheme to brokers.

Michael Faulkner