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Financial Services Authority targets illegal insurance brokers

21 July 2005

The RCVS has learnt that the Financial Services Authority (FSA) has begun a "crackdown" on businesses which may be breaking the law by conducting unauthorised general insurance business since regulation began in January 2005.

An FSA press release, issued recently, states that a programme of visits to businesses across the UK is well underway; this will include those that are primary intermediaries (brokers who sell insurance as their main business) and secondary intermediaries (businesses who sell insurance as a secondary activity).

As previously reported in latest news, a veterinary practice would qualify as a secondary intermediary if it advises on pet insurance, arranges insurance on a client's behalf, or makes a claim on behalf of a client.

Practices that passively display promotional literature from pet insurers would not require FSA regulation.

Visits have already occurred in Birmingham, Derby, Leicester and Nottingham, and will take place in other areas of the UK soon.

The FSA has said that it will not put firms out of business unnecessarily. Where breaches are inadvertent, or result from genuine misunderstanding, options for the business will include obtaining proper authorisation.

However, in order to protect consumers, the FSA can choose not to authorise businesses that have wilfully breached parts of the Financial Services and Markets Act and can take criminal proceedings if necessary.

Prospective veterinary clients can check that the practice they want to deal with is authorised by checking the FSA Register.

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