We know that many brokers provide a wide-ranging service, supporting clients beyond the initial sale of our products which help us all to deliver good customer outcomes.
Ensuring that you have the correct regulatory permissions for all the regulated activities you carry out, such as provision of personal recommendations or claims support, is very important. We would therefore like to remind all our intermediary partners of these permissions, which are detailed in The Perimeter Guidance (PERG) section of the FCA Handbook.
Please note the information in this article does not constitute compliance advice and we would always suggest that you seek independent compliance support if you are unsure which permissions are needed in relation to your firm’s activities.
There are five key permissions, in addition to that of ‘Agreeing to carry on a regulated activity’ detailed in PERG which relate to general insurance distribution. Which permissions firms need will depend on the activities they carry out. It’s important to note that the term ‘investments’ in the context detailed below, does extend to contracts of general insurance, such as Private Medical Insurance.
PERG 5.6.2 states that ‘In the FCA's view, a person would bring about a contract of insurance if his involvement in the chain of events leading to the contract of insurance were important enough that, without it, there would be no policy.’
Examples of the type of activity likely to be covered by this permission include negotiating the terms of the contract on behalf of a client, or assisting in the application process, including instructing the insurer to place the customer on risk.
PERG 5.6.3 sets out the criteria for this activity, which is broader than the permission directly above, in that it is not limited by the requirement that the arrangements would bring about the transaction.
Examples of this activity include actively introducing a prospect to an intermediary for advice or to arrange an insurance contract, or an intermediary helping potential policyholders fill in application forms or checking them on the customer’s behalf.
PERG 5.7 explains that this permission is required when intermediaries become directly involved in activities after the conclusion of a contract of insurance, for or on behalf of policyholders, in particular in the event of a claim.
Examples of this activity include directly notifying the insurer of a claim or negotiating the settlement on a policyholder’s behalf.
PERG 5.5 sets out detailed guidance on what activities are likely covered by this permission and PERG 5.5.1 provides the following examples:
- where an intermediary, by accepting on the insurance undertaking's behalf to provide the insurance, commits an insurance undertaking to provide insurance for a prospective policyholder; or
- where the intermediary agrees, on behalf of a prospective policyholder, to buy an insurance policy.
Guidance on this Permission is covered in PERG 5.8. Simply put, if you are offering your advice or opinion as to which policy your client should buy then you are likely to need this Permission.
Please note the information in this article does not constitute compliance advice and we would always suggest that you seek independent compliance support if you are unsure which permissions are needed in relation to your firm’s activities.