FSA COMPLIANCE REVIEWS

INSURERS

An insurer outsourcing any part of its claims handling will be subject to FSA outsourcing rules. In practical terms, this means they must have sufficient overview of suppliers' activities to ensure the commitments and business principles required for authorisation are not breached.

The FSA is concerned that slow and inefficient processes, delays and poor communication create many problems that impact on customers. Insurers and suppliers must show that they have clear operational guidelines backed up by efficient systems, good management and competent staff, as well as an effective review system that allows for the appropriate compliance checks and reports.

CWMC has substantial practical experience of helping both insurers and suppliers in these respects.

SUPPLIERS

We are noting an increasing trend whereby suppliers are experiencing a reluctance by insurers to give them work if they are not themselves FSA authorised, even though they may not be conducting any regulated activity. Our interpretation of this is that authorisation gives insurers a solid indication of the suppliers' commitment to the required standards and creates a perception that their oversight responsibilities will be more straightforward.

If you are a supplier affected by this we can help you safeguard your business and reinforce your reputation by guiding you through the FSA authorisation process.

GENERAL INSURANCE BROKERS

Into the second year of FSA regulation most thought the issue would be trying to stay compliant. In reality many brokers have yet to actually achieve full compliance. Why is this? A mix of complex rules, differing interpretations, new and changing rules, underestimating the work involved, over confidence in existing systems and procedures.

Test yourself against this 10-point checklist. It is not all embracing but covers common current problem areas. If you can honestly answer yes to every point the likelihood is that you are in control. If not let us use our substantial practical experience to help you.

Your Terms of Business is suitably worded to accommodate all relevant disclosures in a clear manner.

You are completing a Client Money Calculation to the required standard and timescale.

Your client account has been audited to the correct standard within the allowed timescale.

You are confident that the required verbal disclosure is made in full when providing immediate cover on the telephone to a retail customer?

Your Demand & Need Statement wordings make sense to a layperson.

You and your staff can switch confidently between the differing disclosure requirements for retail and commercial clients.

On your commercial lines business you are able to identify and deal suitably with "retail" customers.

You have a regular and effective monitoring programme covering sales transactions as well as compliance in all other areas of your business.

You understand the FSA's definition of Treating Customers Fairly and have developed a suitable management strategy.

You have identified and assessed potential conflicts of interest and have implemented a suitable policy.

SECONDARY INTERMEDIARIES

Many retailers and service providers are involved with insurance mediation as a secondary part of their main business. FSA rules in this area are also complex and include the availability of exemption if certain criteria can be met.

We have practical experience in this area and can help you.

CWMC works with insurers, their suppliers, insurance brokers and secondary intermediaries to find sensible, pragmatic and cost-effective solutions to all aspects of regulatory compliance.

To talk to us in confidence, call Chris Wylde on +44 (0)1327 830014.