The FSA has warned brokers, insurers and loss adjusters about dealing with non-regulated entities after reports of loss assessors working at the Carlisle floods without FSA authorisation.
The advice came after a number of people contacted Insurance Times reporting instances of non-regulated work or advice being given to flood claimants.
A spokesman for the FSA said: "It could be a potentially criminal offence to be dealing with a non-authorised company. The onus is on them to check. We are policing this perimeter."
However, the spokesman drew a clear distinction between those being paid for any advice offered and those offering it free after a retired broker in Carlisle received a letter from a local broker warning him off offering free advice to friends and family, because of FSA demands.
The FSA spokesperson said: "There is a double test. One is that the company or individual is engaging in a regulated activity and second that they are being paid for it."