On 1 May 2013, the Financial Conduct Authority (FCA) published a press release to clarify the 12 month transitional period for authorised firms to update their regulatory status in relation to their business stationery and any electronic equivalents.

The FCA has indicated that any regulatory obligations imposed on authorised firms which are derived from European Law such as the FCA’s rules in relation to distance marketing (COBS 5); provision of information about the firm and its services (COBS 6); suitability and advising (COBS 9); and preparation of product information (COBS 13) do not benefit from this transitional period. Authorised firms are therefore required to put plans in place now to ensure these communications contain the appropriate status disclosures.

Background

Before 1 April 2013, authorised firms were required under the Financial Services Authority’s (FSA’s) rules to disclose that they were authorised and regulated by the FSA in letters or electronic equivalents to retail clients.

To take into account the new regulatory regime, the FSA issued a policy statement which included new rules on the disclosure of an authorised firm’s regulatory status in March 2013:

  • Non-Prudential Regulation Authority (PRA) authorised firms (ie insurance intermediaries) are required to state: “Authorised and regulated by the Financial Conduct Authority”
  • PRA authorised firms (ie Lloyd’s Managing Agents and insurers) would be required to state: “Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority”

What does this mean for insurers and insurance intermediaries?

Insurers and insurance intermediaries which provide information to retail clients will need to immediately review their current regulatory status disclosure statement in respect of:

  • Information provided by way of distance communication (ie via a website or the telephone)
  • Initial disclosure documents which set out information about the firm and its services
  • Personal recommendations
  • Key features documents

Whilst the FCA recognises that exceptional circumstances may prevent authorised firms from making all of the necessary disclosure updates immediately, it has confirmed that where transitional provisions are not available, authorised firms are required to demonstrate that they have plans to make these updates at the earliest practical opportunity.