Intermediaries should do a little homework to make sure they don't place themselves in a vulnerable position by using a non-UK regulated product provider.
Braintree, Essex (PRWEB) September 13, 2008
Intermediaries are being warned to check the domicile of their general insurance product providers, or risk being out of pocket. That's because providers that are domiciled overseas are not subject to the demands of the Financial Ombudsman Service (FOS) and the Financial Services Compensation Schemes (FSCS), says Burgesses.com.
It cautions that when the mortgage and general insurance industries came under statutory regulation, they immediately signed up to meet industry standards of professionalism and competence -- that included offering access to the FSCS. Crucially, the FSCS has the power to compensate consumers in the event of the failure of any firm that is authorised. That guarantee does not apply to customers of firms domiciled outside the UK. That can have real consequences for intermediaries selling or advising on products from overseas providers that have no obligation to the Financial Services Authority (FSA) or the FSCS.
Sara-Ann Burgess, managing director of Burgesses.com, explained:
"Intermediaries choosing to sue these firms are denying their clients access to the compensation through the FSCS should something go wrong and they could end up footing the bill.
"Those advising or selling products provided by insurance firms that fall outside of the regulatory regime, and therefore not suing the key facts logo nor providing prescribed information, could also be deemed to fall foul of the FSA's treating customers fairly guidelines.
"Intermediaries should do a little homework to make sure they don't place themselves in a vulnerable position by using a non-UK regulated product provider."
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