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PRU 9.4 Insurance undertakings and mortgage lenders using insurance or mortgage mediation services

Application

PRU 9.4.1R

This section applies to a firm with a Part IV permission to carry on:

  1. (1)

    insurance business; or

  2. (2)

    mortgage lending;

  3. (3)

    and which uses, or proposes to use, the services of another person consisting of:

    1. (a)

      insurance mediation; or

    2. (b)

      insurance mediation activity; or

    3. (c)

      mortgage mediation activity.

Purpose

PRU 9.4.2G

The purpose of PRU 9.4 is to implement article 3.6 of the Insurance Mediation Directive in relation to insurance undertakings. The provisions of this section have been extended to mortgage lenders in relation to insurance mediation activity, and to insurance undertakings and mortgage lenders in relation to mortgage mediation activity, to ensure that firms using these services are treated in the same way and to ensure that clients have the same protection. To avoid the loss of protection where an intermediary itself uses the services of an unauthorised person, PRU 9.4.4 R has the effect of ensuring that each person in the chain of those providing services is authorised.

PRU 9.4.3G

PRU 9.4 supports the more general duties in Principles 2 and 3, and SYSC 3.1.1 R.

Use of intermediaries

PRU 9.4.4R

A firm must not use, or propose to use, the services of another person consisting of:

  1. (1)

    insurance mediation; or

  2. (2)

    insurance mediation activity; or

  3. (3)

    mortgage mediation activity;

unless the conditions in PRU 9.4.5 R and PRU 9.4.7 R are satisfied.

PRU 9.4.5R

The first condition in PRU 9.4.4 R is that the person, in relation to the activity:

  1. (1)

    has permission; or

  2. (2)

    is an exempt person; or

  3. (3)

    is an exempt professional firm; or

  4. (4)

    is registered in another EEA State for the purposes of the IMD; or

  5. (5)

    in relation to insurance mediation activity, is not carrying this activity on in the EEA; or

  6. (6)

    in relation to mortgage mediation activity, is not carrying this activity on in the United Kingdom.

PRU 9.4.6E

  1. (1)

    A firm should:

    1. (a)

      before using the services of the intermediary, check:

      1. (i)

        the FSA Register; or

      2. (ii)

        in relation to insurance mediation carried on by an EEA firm, the register of its Home State regulator;

      for the status of the person; and

    2. (b)

      use the services of that person only if the relevant register indicates that the person is registered for that purpose.

  2. (2)
    1. (a)

      Compliance with (1)(a)(i) and (b) may be relied on as tending to establish compliance with:

      1. (i)

        PRU 9.4.5 R (1); or

      2. (ii)

        in relation to insurance mediation activity, also PRU 9.4.5 R (2) and PRU 9.4.5R (3).

    2. (b)

      Compliance with (1)(a)(ii) and (b) may be relied on as tending to establish compliance with PRU 9.4.5 R (4).

PRU 9.4.7R

The second condition in PRU 9.4.4 R is that the firm takes all reasonable steps to ensure that the person in PRU 9.4.5 R in relation to the activity, is not, directly or indirectly, carrying out the activity as a consequence of the activities of another person which:1

1
  1. (1)

    contravene section 19 of the Act (The general prohibition); or1

  2. (2)

    in the case of activities provided from an establishment in an EEA State, contravene the IMD registration requirements.1

PRU 9.4.8R

In order to comply with PRU 9.4.7 R, a firm may rely on a confirmation provided by the other person in writing if:

  1. (1)

    the confirmation is provided by a person within PRU 9.4.5 R;

  2. (2)

    the firm checked that this is the case; and

  3. (3)

    the firm is not aware that the confirmation is inaccurate and has no grounds for reasonably being aware that the confirmation is inaccurate.

PRU 9.4.9G

The FSA Register can be accessed through the FSA website under the link www.fsa.gov.uk/register.