PERG 8.17A Financial promotions concerning insurance mediation activities

The application of section 21 of the Act and of exemptions in the Financial Promotion Order to invitations or inducements about insurance mediation activities will vary depending on the type of activity. The implementation of the Insurance Mediation Directive has not led to any changes in the definitions of a controlled investment or a controlled activity under the Financial Promotion Order. So:

1. (1)

   rights under any contract of insurance are a controlled investment;

2. (2)

   rights to or interests in rights under life policies are controlled investments but rights to or interests in rights under other contracts of insurance are not;

3. (3)

   the activities of:

   1. (a)

      dealing in investments as agent;

   2. (b)

      arranging (bringing about) deals in investments;

   3. (c)

      making arrangements with a view to transactions in investments; and

   4. (d)

      advising on investments;

   where they relate to contracts of insurance, are controlled activities only where the contract of insurance is a life policy; and

4. (4)

   the activity of assisting in the administration and performance of a contract of insurance is not a controlled activity.

This means that an insurance intermediary will not be communicating a financial promotion:

1. (1)

   where the only activity to which the promotion relates is assisting in the administration and performance of a contract of insurance; or

2. (2)

   purely by reason of his inviting or inducing persons to make use of his advisory or arranging services where they relate only to general insurance contracts or pure protection contracts or both.

But as regards (2), an intermediary will be communicating a financial promotion if he is also inviting or inducing persons to enter into a contract of insurance. This is because the making and performance of the contract by the insurer will be a controlled activity (of effecting and carrying out a contract of insurance). Insurance intermediaries will, however, be able to use the exemptions in Part V of the Financial Promotion Order (see PERG 8.13 (Exemptions applying to financial promotions concerning deposits and certain contracts of insurance) where they promote a general insurance contract or a pure protection contract. Where an insurance intermediary is promoting life policies, he will be able to use any exemptions in Part VI of the Financial Promotion Order that apply to a contractually based investment.