In an exclusive interview with Insurance Times, Sarah Wilson, the head of the FSA's high street firms division, reveals to Christine Seib the shape of the authority's first consultation on the EU's Insurance Mediation Directive
The FSA will release three consultation documents on insurance mediation in the next few months.
FSA high street watchdog Sarah Wilson says two documents will be released "almost simultaneously" in December, with a third document to follow in a month or two.
She says the first document is aimed at general insurance sellers. It will look at the "selling process", focusing on issues around individual transactions, such as advertising, product disclosure and claims handling.
The second document will cover appointed representatives and will be addressed to general insurance, mortgage and investment sellers.
The third document will cover "issues that affect the firm" such as professional indemnity cover, capital requirements and handling of client money.
It will be directed at mortgage and general insurance sellers.
Wilson says the three documents are tied together as many sellers handled products in each of the three sectors.
Wilson, a former Bank of England economist, says she is striving to achieve a balance between the sectors. "I constantly have to bear in mind that many firms do only one kind of business, but many also do some of each and I don't want to stop that by setting requirements that are so different that compliance becomes difficult," she says.
She claims she is aware that many sellers have a business to run and do not have to time to make lengthy replies to numerous consultation documents.
"People should feel entirely at liberty to respond on the bits that matter to them," she says.
"I'm very happy to receive responses that concern only one question or issue."
Wilson accepted a formidable task when she moved into her current position. The EU's Insurance Mediation Directive significantly extended the FSA's remit. By the close of 2004, it will regulate mortgage and general insurance sales on top of its current responsibilities.
The high street firms division was created to set regulatory policy on mortgage and general insurance sales and authorise all appropriate firms in time for the 2004 Directive deadline.
It will then supervise the activities of all small retail businesses dealing in mortgages, general insurance and investments. Wilson said that although it was difficult to get accurate figures, this could mean her division will eventually authorise and regulate well over 20,000 businesses.
Consultation on the upcoming documents will have to be complete and policy finalised by the second half of 2003.
This will allow sellers to see what compliance is required and begin to seek authorisation in time for the Directive to come into force.
Wilson says the strict timetable the division has to adhere to is one of the biggest challenges she faces.
"In the first few months, we were the third player, with the Treasury and the EU, and the EU took longer than we expected on the Directive but we've done a huge amount of work to get up to speed," she says.
"This is a very tight timetable and I'm very conscious that the industry would like as much time as it can have to respond to consultation and to make its own business decisions.
"It's a challenge, in that it has a knock-on effect on the industry if we don't manage it well."
Cambridge-educated Wilson is well accustomed to co-ordinating different areas of industry and negotiating in senior government echelons.
She worked on international and domestic economic policy at the Bank of England, then moved to work on banking supervisory policy with responsibility for capital requirements in relation to market risk.
She also worked as Howard Davies' private secretary when he was deputy governor of the Bank of England and headed an FSA review into pensions mis-selling.
Before taking the position at the new division, she was the FSA's head of mortgage regulation.
"Having a background as an economist means I approach regulation from a proportionate perspective,' she says.
"We need to take account of the costs and the benefits."
Wilson will be taking a break early next year, but says she envisages a long-term commitment to the division.
"It's an extremely important time to be involved in UK retail regulation because of the number of different initiatives coming out and the need for people to think deeply about them," she says.
"It's extremely important for consumers and very interesting for me. I'm looking forward to doing it."