Insurance accountant and consultant Moore Stephens has joined with international law firm Clyde & Co to provide specialist advice
to intermediaries on all aspects of the authorization process and on continuing compliance with FSA requirements. The rigorous FSA regime comes into effect on January 15, 2005. Intermediaries have until July 14 this year to submit their completed registration packs to the FSA. The new rules
are not voluntary. In order to avoid committing a criminal offence or going out of business, intermediaries who intend to carry on business after January 15 next year will have to be
licensed by the FSA.
John Harbor, head of the Moore Stephens Insurance Industry Group
, says, "Most intermediaries will need to begin the registration process two-to-four months before the July 14 submission date in order to prepare the information needed to secure successful authorization. The burden of insurance regulation within the broking market will be significant. Yet many insurance intermediaries do not have the resources and skills to deliver what the FSA expects.
"Much of what the FSA expects from the companies it regulates is nothing other than best practice and good business management. There is therefore an upside. Companies can take advantage of the regulatory regime and add value to their existing business organization, processes and systems. But the downside of not meeting the requirements is severe.
"Successful enforcement action for breach of the regulations could result in directors and/or others being subject to unlimited fines, imprisonment for up to two years, and/or disqualification from acting as a director of a UK company."
Intermediaries must be aware that there is no real alternative to FSA authorization. If they want to arrange the purchase of insurance policies, advise on insurance issues, deal as insurance agents, or assist in the administration and performance of insurance policies, FSA authorization is mandatory. Business as usual is not an option. By offering a flexible menu safeguards / planning, and legal issues, Moore Stephens and Clyde & Co believe they can guide intermediaries through what is certain to be a rigorous regulatory minefield.