FSA extends insurance control

Solicitors offering insurance products to clients that are stand-alone and not incidental to other services will require authorisation from the Financial Services Authority (FSA) later this year, or early next year, as part of the ongoing changes under the Financial Services and Markets Act 2000.

The FSA's powers of regulation will be extended to cover firms carrying out insurance mediation activities as a stand-alone service in respect of long-term care insurance products from 31 October 2004.


Firms offering stand-alone services in respect of other general contracts of insurance will require authorisation from 14 January 2005.


The Law Society will continue to regulate law firms in respect of advice, arrangements and administration done by firms in relation to insurance policies which are incidental to or complementary to other work.


The vast majority of firms carry out some form of work that falls into this category - such as arranging home insurance in relation to conveyancing transactions or after-the-event insurance on personal injury cases.


Solicitors must consider what type of insurance work they do in a specific section of this year's practising certificate renewal application relating to 'insurance mediation'.


Firms offering insurance to clients as a stand-alone are likely to be those registered by the General Insurance Standards Council, which will now have to register with the FSA.


A spokesman for the Law Society said: 'The vast majority of solicitors offer some form of insurance as an incidental service. From 31 October or 14 January they will not need to be authorised with the FSA but they will need to be on the FSA register and to appoint a designated compliance officer for their insurance work. It is not anticipated that there will be a great number of solicitors offering stand-alone insurance to clients, and who will therefore require separate FSA regulation.'


The Law Society became a designated professional body in 2001 under the Financial Services and Markets Act when the FSA assumed power as the City's super-regulator. Only around 200 firms are currently registered to carry out investment business with the FSA.