I am writing concerning the report in Insurance Times (14 November) on my appearance at the Strategy 2002 conference .
I am concerned that the headline "FSA to allow failing brokers to trade" and the first few paragraphs of the article, misled your readership about a key aspect of the forthcoming regulation of insurance intermediaries. At Strategy 2002, I explained to delegates an outline of the authorisation process, including the need to build into the timetable a period to consider appeals by firms or individuals whose application is rejected in the first instance. I explained that firms not authorised by the FSA when statutory regulation goes live in October 2004 will not be able to continue trading and, if they do, will be trading illegally.
I was asked by a delegate what would happen if the volume of applications was so high that, through no fault of any party, it was not possible to consider each of the appeals by N3. I said we would design the authorisation process in such a way as to mitigate against this risk. In the unlikely event that the scenario described by the delegate became an issue, the FSA and the Treasury would need to consider if it would be possible for those concerned to be provided a `safe harbour' so they could keep trading until their appeal. But there will be legal difficulties with this, and the Treasury and the FSA will consider these when designing the authorisation process and planning for contingencies.
It is essential that your readers understand the importance of submitting their applications for authorisation in a timely and accurate way and they should presume if they have not received authorisation by N3, they will be unable to continue trading in a regulated activity, such as insurance broking.
John Tiner
FSA managing director
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