FSA warns of deadline for insurance sellers

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The Independent Online

The Financial Services Authority has written to the chief executives of Britain's general insurers, warning about the high number of intermediaries who have still not applied for authorisation, with just five months until the FSA begins regulating the sector.

The Financial Services Authority has written to the chief executives of Britain's general insurers, warning about the high number of intermediaries who have still not applied for authorisation, with just five months until the FSA begins regulating the sector.

While almost 5,000 financial advisers, brokers and insurance companies have applied for the authorisation, the regulator is struggling to encourage the numerous businesses who offer insurance as a secondary product to apply for it. These include businesses such as vets, dentists and motor dealers who sell insurance to customers alongside their main line of business.

If these companies do not secure FSA approval before January, when the regulations come into force, they will not be authorised to carry on selling insurance products.

In his letter to the CEOs, David Strachan, the head of the FSA's insurance sector leader, urged insurers to put pressure on these businesses to secure the necessary approval as soon as possible, to prevent administrative chaos next year. He said the number of so-called "secondary intermediaries" that had applied for authorisation so far remained much smaller than the number of brokers and advisers who had applied. However, he said the numbers were contrary to the regulator's expectation that there would be a far greater number of applications from those in the secondary market.

"These figures lead us to believe there are risks to your distribution channels arising from these firms not seeking to become authorised or becoming appointed representatives in time for 14 January 2005," he wrote.

A spokesman for the FSA said: "We're confident that all our timescales for the regulation of general insurance are achievable and have been working closely with firms and trade bodies within the industry to realise this."

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