Understanding FSA
Advising and selling
- Providing information on the Insurers (or intermediary's) Authorisation status
- Ensuring advice provided is suitable
- Providing a 'Demands & Needs' statement
- Commission Disclosure
This information will include things like company name, statutory status, how to check details on FSA register, whether the policy was selected from one or more insurers, and how to make a complaint.
The seller must ensure that any recommendation it makes is suitable to satisfy the customer's demands and needs. When assessing the suitability of a policy for a customer, the following must be considered:
- The customers circumstances
- Relevant insurance which the customer already has
- Information already held about the customer
- Material facts
- Level of cover required
- Exclusions / limitations applicable
- Cost of the cover
If sold face-to-face, this statement must be provided before the policy sale is concluded unless immediate cover is required. It must detail the customer's requirements, confirming whether or not the policy was recommended by the seller and if so, why.
For telephone sales, the statement can be provided after the sale concludes, if immediate cover required, or if sold on the internet this statement must be provided beforehand.
When a contract of insurance is renewed, the parties enter into a new contract of insurance. The rules around advising and selling apply equally to renewals.
The FSA has stated that an intermediary has a duty to disclose their commission when they act as the agent of the customer but only when the customer enquires.
For commercial insurance, the rules require whenever the customer asks the intermediary must disclose their commission. In addition, commission earned from any associated company from the sale of the insurance to that customer must also be included.
Disclosure has to be provided in writing.
