AUTH App 5.14 Exemptions

Professional firms (broadly firms of solicitors, accountants and actuaries) may carry on insurance mediation activities in the course of their professional activities. Exempt professional firms carrying on insurance mediation activities may continue to be able to use the Part XX exemption to avoid any need for authorisation. PROF 2 (Status of exempt professional firm) contains guidance on the Part XX exemption. They will, however, need to be shown on the FSA Register as carrying on insurance mediation activities, in order to benefit from this exemption. The task of registration is the responsibility of the designated professional bodies who will need to inform the FSA both of member firms carrying on insurance mediation activities and individuals within firms' management responsible for these activities. 1

Professional firms with practices that involve acting for claimants in litigation against insurance undertakings are likely to be carrying on the regulated activity of assisting in the administration and performance of a contract of insurance. Exempt professional firms whose practices contain a material element of such activity should consider whether they can continue to take advantage of the Part XX exemption to avoid any need for authorisation, having regard to the relevant provisions of the Act, in particular section 327 (Exemption from the general prohibition) and the guidance in PROF 2.1.14 G (Exempt regulated activities).1

Professional firms should be aware of the disapplication of the exclusions for trustees (article 66) and activities carried on in the course of a profession or non-investment business (article 67) outlined in AUTH App 5.11.7 G (Exclusions disapplied in connection with insurance mediation) where their activities would amount to insurance mediation. Where they do not, they will still be able to rely upon article 67. Otherwise, the Nonexempt Activities Order imposes limitations on the extent to which professional firms can give advice to individuals. In particular, a professional firm cannot recommend to a private client that he buy a life policy, unless he is endorsing a corresponding recommendation given to the client. The recommendation he endorses must be one given by an authorised person permitted to advise on life policies, or an exempt person for these purposes. No such restrictions apply, however, in relation to contracts of insurance other than life policies.1

Professional firms relying (prior to 14 January 2005) on the exclusions in articles 29 (Arranging deals with or through authorised persons) and 33 (Introducing) when introducing clients to authorised persons in connection with the purchase of life policies are directed to AUTH App 5.11.3 G (Exclusions disapplied where activities relate to contracts of insurance). More generally, as indicated in AUTH App 5.6.8 G, the article 72C exclusion (Provision of information on an incidental basis) is potentially available to unauthorised professional firms including exempt professional firms. This may be relevant to professional firms arranging contracts of insurance for clients on an individual basis.1

In addition to certain named persons exempted by the Exemption Order from the need to obtain authorisation, the following bodies are exempt in relation to insurance mediation activities that do not relate to life policies:

1. (1)

   local authorities but not their subsidiaries;

2. (2)

   registered social landlords in England and Wales within the meaning of Part I of the Housing Act 1996 but not their subsidiaries;

3. (3)

   registered social landlords in Scotland within the meaning of the Housing (Scotland) Act 2001 but not their subsidiaries;2

4. (4)

   the Housing Corporation;

5. (5)

   Scottish Homes;

6. (6)

   The Northern Ireland Housing Executive.

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