Regulatory Status Options

The FSA has Rules to meet these objectives and also the requirements of The Insurance Mediation Directive of 2002. Statutory regulation gives companies who deal in insurance, either as primary or secondary intermediaries, four options regarding their regulatory status. They can choose:

1. Full Authorization
   
2. Appointed Representative
3. Appointed Introducer
4. Opt Out Of Insurance Mediation

The third option is very limited and the fourth option could mean that a property manager, for example, is not able to offer a full service if they cannot offer to administrate the insurance.

Choosing to be an Appointed Representative does not bring with it a ‘get out of jail free card’. Being an Appointed Representative brings with it responsibilities. The company has to decide who they wish to be their principal or principals and they have to agree to accept the company. The company may have to have an Approved Person [if the company has staff who deals with customers regarding insurance]. The company will have to enter into an agreement with the principal and if there is more than one the principals will have to enter into a multi principal agreement and agree between themselves on a ‘lead’ principal.

There are other things to take into consideration; options regarding obtaining quotations are limited as they can only be obtained through the market available to the principal. Meeting compliance requirements and evidencing that they are met inevitably increases the workload, for many businesses the procedures are already in place but not formally recorded. This includes training staff and recording their continuing professional development. The Appointed Representative has responsibilities to the principal and must accept that the businesses are linked by this relationship. The Appointed Representative cannot jeopardise the principal’s regulatory position by not actively ensuring the compliance requirements are met.

However, on the plus side, the principal does the ‘legwork’, keeping up with regulation and passing on the information and helping to put procedures in place. The Appointed Representative benefits from the products and services available and the customer benefits from enhanced customer service.