The majority of Jersey, Guernsey and Isle of Man-based brokers who deal with UK clients will not be required to apply for authorisation, according to the FSA.
The clarification comes after a Jersey-based broker contacted Insurance Times seeking advice about its responsibilities under the FSA's regime. "I'm concerned that insurers may be reluctant to deal with us unless they understand our position," the broker said.
An FSA spokeswoman said that because Jersey, Guernsey and the Isle of Man are not members of the EU, brokers based there do not have passporting rights into the UK under the EU's Insurance Mediation Directive.
But she said that such firms, who do not have a UK presence, could continue to carry on broking for UK clients providing they complied with the FSA's financial promotion rules which governed advertising.
Advertising to UK clients must be "clear, fair and not misleading", and ads must be approved by a firm that was authorised by the FSA, the spokeswoman said.
She said it would be "highly unusual" for a broker based in Jersey, Guernsey or the Isle of Man to apply for direct FSA authorisation as a number of exemptions apply in the FSA's rules for such brokers.
"If you carry on a regulated activity in the UK, for example giving advice remotely, then it's likely you would qualify for an exclusion," the spokeswoman said.
But she said that because brokers' circumstances differ, brokers should call the FSA's contact centre.