Anika Bourley, Parliamentary Correspondent

The FSA will be responsible for regulating the sale of travel insurance sold alongside a holiday, the Treasury said this week.

The move follows a review by the Treasury of the sales practices of travel agents and tour operators, amid concerns of mis-selling.

Travel agents selling insurance alongside holidays are currently exempt from FSA regulation.

Economic Secretary to the Treasury Ed Balls said “Consumers in the future buying travel insurance sold alongside their holiday will get the same core regulatory protection and rights as consumers buying stand-alone travel insurance do now.”

Travel firms that decide not to seek FSA authorisation will be able to sell travel insurance as appointed representatives.Biba, which has campaigned for the regulation of travel agents, welcomed the move. Eric Galbraith, Biba chief executive, said: “Consumers should receive clear and well-informed advice when purchasing insurance, a service which can be best provided by brokers and intermediaries.

“It is vital that consumers are protected when they go abroad, that they know what they are buying, and what their travel insurance policies do and don’t cover. Today’s decision will go a long way to ensure this happens.”

Nick Starling, the ABI’s director of general insurance and health, said: “The FSA will need to ensure that consumers are not deterred from buying travel insurance.”

The new regulations are expected to come into effect in January 2009 after a further consultation period.