The next few months will be critical for brokers who want to comply with the new FSA regime. That's why Insurance Times has launched a new weekly feature - Compliance Zone - to provide news, views and advice to help you. In this first edition, Michael Faulkner asks a range of brokers to fill in the draft application forms for FSA authorisation and comment on their experiences

FSA application forms assessed

Ted Stroud, principal Ted Stroud Insurance Services Based in Scotland with three staff - 35%
commercial insurance.

Premium income: £600,000.

"It's a hard slog to complete, but at end of day form filling is a way of life for brokers.

"Overall, it was not too daunting and there was nothing that I was unsure about. It was fairly well thought out, although it needs polishing.

"The form took less than an hour to complete, although this will depend on the availability of management information. We have the capability and can do month-by-month analyses, but some brokers may not have it."

A medium-sized commercial and personal lines broker

"All the forms are generally clear and straightforward to complete. They have provided a lot of information about the questions they are asking to help in completing.

"On the face of it the questions are generally very simple. For example, "Will the firm be compliant with the senior management, systems and controls requirements at the date of authorisation? -Yes or No".

"However, what people must remember is that firms must have a plan in place that shows how they will achieve compliance by the date of authorisation. The FSA is not going to just accept a "yes"; it will be checking out firms by requesting copies of plans and requiring these within 24 to 48 hours, no doubt.

"On the basis of just completing the form it can be done very quickly, but it is the work behind it that will take the time. Any firm, on just seeing the form, may get the wrong impression of what they need to have in place.

"Firms will have to ensure that they have well thought out plans in place before they send in their applications. Any firm that says it will be compliant by authorisation date but which, when asked by the FSA to show how they will be compliant, doesn't have a plan in place, may find that its authorisation will be delayed past authorisation date.

"Additionally, all firms with an annual income greater than £1m have to complete a further three forms: HSF Annex 1 - Regulatory Business Plan; HSF Annex 2 - Compliance; and HSF Annex 3 - Systems.

"These forms require additional information, including details of products sold, marketing plans and financial projections. The information required on these forms will make them a bit more complicated, so I think for a lot of companies we may have only seen half the story."

Glynn Rowett, principal Rowett Insurance Broking

Based in Devon and Cornwall with 30 staff - 55% commercial insurance. Premium income: £4.2m.

"At first glance the form is somewhat overwhelming in terms of size, although closer inspection shows a clear and logical progression. Most of the form is fairly straightforward, but some questions appear ambiguous or unspecific. For instance, there are some totally open questions, which may lead to individuals setting their own parameters in terms of disclosure.

"Confusion also arises where words or phrases are not defined for the purposes of the form. The lack of clarification on such details could lead to a flood of calls to the help line - a situation clearly best-avoided.

"While the criticisms are minor, the cumulative effect, especially for small brokers who do not have the benefit of discussion with others, coupled with the worry of an unsuccessful application and lost fee could lead to queries which would be avoided at this stage.

"In general, the form is fairly clear and easy to complete. On seeing the form, the feeling is that many worries will be calmed.

"The form is generally a less onerous task than imagined, and realistic - especially in the case of small businesses that cannot afford to be swamped by the expectation of bulky submissions.

"The only real concern raised by this exercise is the lack of finality. Submission, indeed acceptance of the application, does not require evidence of 'complete' compliance.

"We must wonder whether the implications of less than full commitment are impressed on applicants. It is easy to submit an application with the idea of working towards a future date with the best of intentions.

"It is a very real concern that once the application is made, day-to-day pressures take their toll on those intentions as the deadline rapidly approaches. Indeed, the intention to comply means very little if that intention does not lead to definite implementation. It would be all too easy to tick the right boxes and go back to 'business as usual'."

Carl Woodroffe, director MCIS Based in Birmingham with 16 staff - 98% commercial insurance Premium income: £10m+

"The forms are not always very clear; for example the use of the words 'this field is optional (or mandatory)' is misleading on occasions. But most, if not all, the appropriate questions appear to be asked.

"The FSA has sought to combine the documentation for mortgage and general insurance, but possibly a better solution, making it less misleading, would have been to have a separate application for mortgage advice.

"For us, six forms would need to be completed. Two directors would be needed to complete/sign the main form, HSF Form 1, but it appears that each of the five directors would need to complete Form B (Controllers and/or Approved Persons).

"In our case, it would probably take a half to one day to complete Form 1 and probably an hour for each director to understand and complete Form B.

"It is early days to judge all aspects, but, I remain positive about regulation."

  • To try your hand at filling in the form visit the Compliance Zone online at