Welcome to Law Link (ATE) Ltd ATE Insurance Compliance Issues Area.
We try and provide useful information on all areas of compliance relating to the sale of ATE Insurance.
Are you registered with the FSA or an EPF (Exempt Professional Firm)?
To Sell any insurance to a client you either need to be registered by the FSA or have EPF status. It's best to check to see if you are registered and you can do that by checking the full FSA register here or EPF register here.
Anyone who carries out insurance mediation activities (regulated activities under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO)) must either be authorised to do so by the FSA or fall within a number of exemptions. This includes dealing in, arranging, assisting in the administration and performance of and advising on contracts of insurance.
Members of designated professional bodies such solicitors who are members of the Law Society do not have a requirement for authorisation if certain conditions are met (broadly, if the sale of insurance is incidental to the provision by the firm of its professional services) (section 327, FSMA). Despite the exemption, all professional firms that carry provide insurance to clients must be shown on the FSA's EPF register (article 94, RAO).
A solicitor firm will need to ensure that it also complies with the Solicitors' Financial Services (Conduct of Business) Rules 2001 (Solicitors' Rules) and the Solicitors' Financial Services (Scope) Rules 2001 which set out the extent of regulated activities that can be undertaken by solicitors.
What do you do if you are not on either register?
The Solicitors Regulation Authority (SRA) is responsible for registration and informs the FSA both of the firms carrying on Insurance Mediation Activities and the individuals within firms' management responsible for those activities. Contact the SRA and advise that you wish to appear on the Exempt Professional Firm register. To contact the SRA click here.
When I am regulated or an EPF what are my obligations?
Status disclosure. Firms must include the following prescribed statement either in their engagement letter, or separately in writing, before carrying on any IMA for a client (rule 3(3), Solicitors' Rules):
"We are not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity, which is broadly the advising, selling and administration of insurance contracts. This part of our business including arrangements for complaints or redress if something goes wrong is regulated by the Law Society. The register can be accessed via the Financial Services Authority website at www.fsa.gov.uk/register".
Fair analysis. When recommending a contract of insurance, a firm must tell its client if it is giving advice on the basis of a fair analysis (rule 4.2.2R, Insurance: Conduct of Business Rules, the FSA Handbook of rules and guidance) (ICOB). This involves the firm making a sufficiently large selection of providers of a particular insurance available to meet the client's needs. Solicitor Firms will then need to keep abreast of market developments, new improved products and update their selection or panel accordingly.
If the firm does not conduct a fair analysis of the market, it must:
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Advise whether it is contractually obliged to conduct IMA only with one or more insurers.
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Advise that the client can request details of the selected insurers in relation to the contract of insurance provided.
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Provide the client with such details on request (rule 4.2.2R, ICOB).
Demands and needs statement. Before finalising a contract, if the firm recommends a contract of insurance, it must provide the client with a written demands and needs statement unless one of the exceptions in appendix 1 to rule 3(2) of the Solicitors' Rules applies.
Appendix 1 to rule 2(1) explains what should be taken into account.
Appendix 1 to rule 3(1) states what the demands and need statement should contain. In brief it should set out how the contract meets the client's demands and needs and reflect the complexity of the contract; it is not intended simply to summarise the policy and no summary of the policy need be attached.
An example of paragraphs you may wish to use is below:
" We are not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity, which is broadly the advising, selling and administration of insurance contracts. This part of our business including arrangements for complaints or redress if something goes wrong is regulated by the Law Society. The register can be accessed via the Financial Services Authority website at www.fsa.gov.uk/register".
We have taken into account the following information in considering which policy to recommend to you:
What happens if you lose your case
What happens if you withdraw or discontinue your case
The amount of cover necessary for your case
If you lose your court case this may result in an order being made against you to pay the other side's costs.
If you lose your case you may be liable for our disbursements
You may lose your case or your case may have to be withdrawn because of lack of evidence.
Based on the information which you have provided to us, you require a policy of insurance which will meet these demands and needs.
We have recommended Law Link (ATE) Ltd as it meets your demands and needs for the following reasons: Law Link (ATE) Ltd can provide a policy that protects you for the other sides costs and our disbursements if you lose your case at court, with the agreement of all parties you withdraw your case and further more there should be no cost to you if you win your case provided you co-operated in the case and subject to the terms and conditions of the policy. A copy of the Key Facts are enclosed.
We only deal with products from Law Link (ATE) Ltd for legal expenses insurance policies, but we are not contractually obliged to conduct business in this way.
In making this recommendation we have taken into account details of your existing insurance cover. "