There has been much discussion in recent months about the real impact of the recent transfer of general insurance intermediary regulation on 14 January this year from the General Insurance Standard Council (GSIC) to the Financial Services Authority (FSA). Not only did this day mark a new statute-based regulatory regime for general insurance intermediaries, but it means that, for the first time ever, the vast majority of the insurance industry – including, to a limited extent, Lloyd’s of London – is regulated by a single, politically accountable regulator.
So what is the practical effect of this? For general insurance intermediaries (those firms that either deal as an agent, arrange or bring about deals, make arrangements with a view to transactions in, assist in the administration and performance of, advise on, or agree to carry on any of these activities in relation to general insurance contracts) will first be concerned with getting to grips with a new conduct of business regime – the Insurance: Conduct of Business Rules (ICOB) – as well as all of the other aspects of the FSA regime applicable to regulated firms generally. The burden on in-house compliance and legal functions of affected firms will inevitably increase which, in turn, is likely to lead to an increased reliance on external legal advisers.
