From today (14 January 2005) - GI Day - customers taking out or renewing a general insurance policy will enjoy additional protection, as the Financial Services Authority takes over responsibility for regulating general insurance sales, advice, administration, and arranging involving about 40,000 firms in all. This is a major extension of the FSA's role that will benefit some 35 million UK consumers who take out or renew 77 million policies each year for home and contents, vehicle, medical, payment protection and other types of general insurance.

Among the many advantages of the new regime will be clearer information for consumers about general insurance policies through newly introduced 'keyfacts' documents. Consumers will be able to compare insurance policies more easily, with clear information on any significant and unusual exclusions, understand the nature and cost of the policy they are buying and have access to the Financial Ombudsman if they have a complaint and to the Financial Services Compensation Scheme if firms go out of business.

John Tiner, FSA Chief Executive said: "The FSA has worked closely with the insurance industry to develop a workable and proportionate regime and to achieve a smooth transition into the new era. We are pleased with the co-operation we have had from the industry and the wholesale markets and the way they are rising to the new challenges ahead. Regulation is acting as a catalyst for change bringing benefits to both consumers and to the efficient operation of the insurance markets.
An early priority for us will be to enforce the perimeter of the new regime and crack down on any firms that may consider continuing with unauthorised and illegal selling and arranging of insurance."

Details of firms regulated to conduct general insurance business - either directly authorised or as appointed representatives of authorised firms - have been placed on the FSA Register today. This information enables insurance companies and customers to check whether the firms with which they are dealing have the appropriate authorisation. This can be done using the Firmcheck service on the FSA Register or, for consumers without internet access, by calling the FSA's help line on 0845 606 1234.

As at today the total number of directly authorised firms able to conduct general insurance business is 18,130 13,291 new authorisations and 4,839 variations of permission. In addition, authorised firms with a general insurance permission had a total of about 22,000 appointed representatives.

Applications from a further 941 firms are still being processed. Under arrangements announced by the government last month, these firms can continue to sell or arrange general insurance on an interim basis until a final decision is reached on their application. It will be illegal for firms that did not submit complete applications to the FSA by midnight on 13 January to carry on business from today.

GI regulation will deliver a better deal for retail consumers because it:

• means consumers will get clear pre-sale information in a policy summary bearing a keyfacts logo;
• will raise and maintain the quality of advised sales. Only a suitable policy can be recommended and customers receive a suitability statement so that they can check the advisers recommendation;
• reduces the likelihood of consumers buying unwanted or inadequate cover. Retail customers will be informed of significant and unusual exclusions in the policy summary. They will also be told the premium separately from the cost of other goods and services provided;
• requires that adequate notice of renewal must be given to enable retail and commercial customers to shop around and find alternative cover if their insurer is not willing to renew;
• sets standards for fair and prompt handling of claims;
• protects consumers' money when it is held by insurance intermediaries - for example, premiums for onward payment to insurers and claims money to be paid to consumers.
• policyholders will have access to an independent dispute resolution service - the Financial Ombudsman Service (FOS) and to the Financial Services Compensation Scheme

The new regime also applies to wholesale general insurance business conducted at Lloyd's of London and through the London Market.

The FSA has been working on the new regulation for almost three years, based on the EU Insurance Mediation Directive and the Government's decision that the FSA should be the statutory regulator of general insurance. Based on independent research involving interviews with a sample of firms in the general insurance industry, the FSA estimates that insurance regulation will cost just 2.80 for each insurance policy.

The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

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