1This chapter applies to a firm with Part 4A permission to carry on insurance mediation activity.
The main purpose of this chapter is to implement in part the provisions of the Insurance Mediation Directive as these apply to firms regulated by the appropriate regulator.
A firm3, other than a sole trader, must allocate the responsibility for the firm'sinsurance mediation activity to a director or senior manager.
3[Note: Article 3(1), fourth paragraph, of the Insurance Mediation Directive1]
1The firm may allocate the responsibility for its insurance mediation activity to an approved person (or persons) who is:5
(if the firm is not a relevant authorised person): 5
performing:5
an FCA governing function; or5
(other than a person who is a5non-executive director of the firm5); or
performing5 the apportionment and oversight function; or
performing5 the significant management function in so far as it relates to dealing in investments as principal, disregarding article 15 of the Regulated Activities Order (Absence of holding out etc) (or agreeing to do so) or an activity which is not designated investment business;
(if a firm is a relevant authorised person) a director of the firm who:5
is not a non-executive director; and5
is an approved person of that firm.5
Typically a firm will appoint a director who is an approved person of that firm5 to direct its insurance mediation activity. A firm that is not a relevant authorised person may also appoint a person performing another FCA governing function or PRA governing function.5
A firm should not appoint someone performing one of the FCA’s or PRA’s non-executive directorcontrolled functions or any other non-executive director.5
Where5 responsibility for a firm’sinsurance mediation activity5 is allocated to a person performing a controlled function that is not in paragraph (1)5, the firm5 must ensure that the firm'sinsurance mediation activity is appropriately allocated. If the apportionment and oversight function applies to the firm, the person performing the apportionment and oversight function with responsibility for the apportionment of responsibilities should carry out the allocation.
The descriptions of significant influence functions, other than the required functions, do not extend to activities carried on by an insurance intermediary with permission only to carry on insurance mediation activity and whose principal purpose is to carry on activities other than regulated activities (see SUP 10A.1.18 R9). In this case, the firm may allocate the responsibility for the firm'sinsurance mediation activity to one or more of the persons performing the apportionment and oversight function who will be required to be an approved person.
9Paragraph (2) does not apply to a relevant authorised person.5
In the case of a sole trader, the sole trader will be responsible for the firm'sinsurance mediation activity.
2Where a firm has appointed an appointed representative to carry on insurance mediation activity on its behalf, the person responsible for the firm'sinsurance mediation activity will also be responsible for the insurance mediation activity carried on by an appointed representative.
The FCA will specify in the Financial Services Register the name of the persons to whom the responsibility for the firm'sinsurance mediation activity has been allocated. by inserting after the relevant controlled function the words "(insurance mediation)". In the case of a sole trader, the FCA will specify in the Financial Services Register the name of the sole trader as the 'contact person' in the firm.
A firm3 (other than a connected travel insurance intermediary)4 must establish on reasonable grounds that:
3a reasonable proportion of the persons within its management structure who are responsible for insurance mediation activity; and
all other persons directly involved in its insurance mediation activity;
demonstrate the knowledge and ability necessary for the performance of their duties; and
all the persons in its management structure and any staff directly involved in insurance mediation activity are of good repute.
[Note: Article 4(1) and (2) of the Insurance Mediation Directive2]
2In determining a person's knowledge and ability, the firm should have regard to matters including, but not limited to, whether the :
has demonstrated by experience and training that he is able or1 will be able to perform his duties related to the firm'sinsurance mediation activity; and
1satisfies the relevant requirements in1 the FCA's7 Training and Competence sourcebook and the Senior Management Arrangements, Systems and Controls sourcebook1.
17In considering a person's repute the firm must ensure that the person:
has not been convicted of any serious criminal offences linked to crimes against property or other crimes related to financial activities (other than spent convictions under the Rehabilitation of Offenders Act 1974 or any other national equivalent); and
has not been adjudged bankrupt (unless the bankruptcy has been discharged);
under the law of any part of the United Kingdom or under the law of a country or territory outside the United Kingdom.
[Note: Article 4(2) of the Insurance Mediation Directive2]
2Firms are reminded that Principle 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively. Principle 3 is amplified by the rule which requires firms to take reasonable care to establish and maintain such systems and controls as are appropriate to its business (SYSC 3.1.1 R and SYSC 4.1.1 R).5 A firm's systems and controls should enable it to satisfy itself of the suitability of anyone who acts for it (SYSC 3.2.13 G and SYSC 5.1.2 G).5 This includes the assessment of an individual's honesty and competence. In addition, the competent employees rule (SYSC 3.1.6 R and SYSC 5.1.1 R)5 sets out a high-level competence requirement which every firm should follow.1
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