Insurer fears confusion over authorisation status will lead to FSA action
The UK's second largest insurer is calling for a "stay of execution" on the application of the FSA's broker regulations.
Royal & SunAllliance (R&SA) is asking the regulator for formal confirmation that it will not take action against insurers who trade with unauthorised intermediaries after 14 January 2005.
The insurer is seeking this clarification because of insufficient information provided by the FSA about which brokers are authorised.
R&SA financial services and markets act programme director Blyth Morris said he wanted a formal "stay of execution" from the FSA until the end of the first quarter to give insurers time to ascertain which intermediaries are authorised and which are not.
Last week the FSA provided insurers with a list of brokers who had received 'scope of permission' notices. A 'scope of permission' is received after the 'minded to authorise' (MTA) letter and the list does not contain intermediaries who only have their MTAs.
Morris said, as a result, many brokers who have so far received only their MTAs would be left off.
He said: "There is not enough information to cancel agency agreements. We won't get that information until 18 January."
FSA head of high street firms Sarah Wilson is understood to have told insurers in a speech that they would be given an allowance if they inadvertently traded with unauthorised intermediaries after the 14 January. This was provided they had made "best endeavours" to ascertain the broker's status.
Morris called for the FSA to put this exemption in writing, but the FSA has now said that no flexibility will be given.
A spokesman said: "If an intermediary is not authorised or exempt an insurer cannot trade with them."
- The ABI and Biba are developing a model trust account for brokers that hold only insurer or risk transfer money.
The move follows the publication this month of the FSA's final rules on the co-mingling of client and insurer monies. The FSA's rules only allow apply if a broker hold some client money, so brokers who hold only insurer money fall outside the scope of the FSA's rules.