Related provisions for PERG 5.16.1
1 - 20 of 53 items.
This guidance is based on the statutory instruments made as part of implementing the IMD in the United Kingdom. This legislation includes the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2003 (S.I. 2003/1476), which amends among others the Regulated Activities Order, the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001 (S.I. 2003/1217), the Non-Exempt Activities Order and the Business Order. Other legislation
The IMD imposes requirements upon EEA States relating to the regulation of insurance and reinsurance mediation. The IMD defines "insurance mediation" and "reinsurance mediation" as including the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance and reinsurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim (the
The United Kingdom's approach to implementing the IMD by domestic legislation is, in part, through secondary legislation, which will apply pre-existing regulated activities (slightly amended) in the Regulated Activities Order to the component elements of the insurance mediation definition in the IMD (see PERG 5.2.5 G and the text of article 2.3 IMD in PERG 5.16.2 G (article 2.3 of the Insurance Mediation Directive)).
The effect of the IMD and its implementation described in PERG 5.2.5 G to PERG 5.2.6 G is to vary the application of the existing regulated activities set out in PERG 5.2.8G (1) to PERG 5.2.8G (3), PERG 5.2.8G (5) and PERG 5.2.8G (6), principally by applying these regulated activities to general insurance contracts and pure protection contracts and by making changes to the application of the various exclusions to these regulated activities. These regulated activities applied prior
It is the scope of the Regulated Activities Order rather than the IMD which will determine whether a person requires authorisation or exemption. However, the scope of the IMD is relevant to the application of certain exclusions under the Regulated Activities Order (see, for example, the commentary on article 67 in PERG 5.11.9 G (Activities carried on in the course of a profession or non-investment business)).
Table Territorial issues relating to overseas insurance intermediaries carrying on insurance mediation activities in or into the United Kingdom
Needs Part IVpermission |
Schedule 3 EEA passport rights available |
Overseas persons exclusion available |
|
Registered EEA-based intermediary with UK branch (registered office or head office in another EEA State) |
No |
Yes |
No |
Registered EEA-based intermediary with no UK branch providing cross-border services |
No |
Yes |
Potentially available [see Note] |
Third country intermediary operating from branch in the UK |
Yes |
No |
No |
Third country intermediary providing services in (or into) the UK |
Yes unless overseas persons exclusion applies |
No |
Potentially available |
This does not, however, affect the firm'sauthorisation under Schedule 3 to the Act (see PERG 5.12.9 G to PERG 5.12.10 G (Passporting)). |
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Section 418 of the Act extends the meaning that 'carry on regulated activity in the United Kingdom' would normally have by setting out additional cases in which a person who would not otherwise be regarded as carrying on the activity in the United Kingdom is to be regarded as doing so. Each of the following cases thus amounts to carrying on a regulated activity in the United Kingdom:(1) where a UK-based person carries on a regulated activity in another EEA State in the exercise
UK-based persons must obtain Part IV permission in relation to their insurance mediation activities in the United Kingdom as one of the following:(1) a body corporate whose registered office is situated in the United Kingdom; or(2) a partnership or unincorporated association whose head office is situated in the United Kingdom; or(3) an individual (that is, a sole trader) whose residence is situated in the United Kingdom.The United Kingdom will, in each case, be the Home State
The effect of the IMD is that any EEA-based insurance intermediaries must first be registered in their home EEA State before carrying on insurance mediation in that EEA State or other EEA States. For these purposes, an EEA-based insurance intermediary is either:(1) a legal person with its registered office or head office in an EEA State other than the United Kingdom; or(2) a natural person resident in an EEA State other than the United Kingdom.Registered EEA-based insurance intermediaries
The E-Commerce Directive does not remove the IMD requirement for persons taking up or pursuing insurance mediation for remuneration to be registered in their Home State. Nor does it remove the requirement for EEA-based intermediaries to acquire passporting rights in order to establish branches in the United Kingdom (see PERG 5.12.7 G (Where is insurance mediation carried on?) in relation to electronic commerce activity carried on from an establishment in the United Kingdom) or
Put shortly, the E-Commerce Directive relates to services provided into the United Kingdom from other EEA States and from the United Kingdom into other Member States. In broad terms, such cross-border insurance mediation services provided by an EEA firm into the United Kingdom (via electronic commerce activity or distance means) will generally be subject to IMD registration in, and conduct of business regulation of, the intermediary's EEA State of origin. By contrast, insurance
1(1) The European Commission has not produced an interpretative communication on the Investment Services Directive. It is arguable, however, that the principles in the communication on the Second Banking Directive can be applied to investment services. This is because article 11 of the Investment Services Directive (containing provisions relating to conduct of business rules) also applies to the investment services of firms operating under the Banking Consolidation Directive.1(2)
The E-Commerce Directive does not affect the responsibilities of Home State under the Single Market Directives. This includes the obligation of a Home State regulator to notify the Host State regulator of a firm's intention to establish a branch in, or provide cross border services into, the other EEA State.
1The Single Market Directives require credit institutions, insurance undertakings, investment firms, UCITS management companies and insurance intermediaries to make a notification to the Home State before establishing a branch or providing cross border services.SUP 13.5 (Notices of intention) sets out the notification requirements for a firm seeking to establish a branch or provide cross border services. As firms will note, the decision whether a passport notification needs to
A UK firm cannot establish a branch in another EEA State for the first time under an EEA right unless the conditions in paragraphs 19(2), (4) and (5) of Part III of Schedule 3 to the Act are satisfied. It is an offence for a UK firm which is not an authorised person to contravene this prohibition (paragraph 21 of Part III of Schedule 3 to the Act). These conditions are that:(1) the UKfirm has given the FSA, in accordance with the FSArules (see SUP 13.5.1 R), notice of its intention
4If the UK firm is passporting under the Insurance Mediation Directive and the EEA State in which the UK firm is seeking to establish a branch has not notified the European Commission of its wish to be informed of the intention of persons to establish a branch in its territory in accordance with article 6(2) of that directive, SUP 13.3.2 G (2) and SUP 13.3.2 G (3) do not apply. Accordingly, the UK firm may establish the branch to which its notice of intention relates as soon as
4An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may establish a branch in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention in SUP 13.3.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative.5
(1) If a UK firm has given the FSA a notice of intention in the required form, then:(a) if the UK firm'sEEA right derives from the Banking Consolidation Directive, the Investment Services Directive, or the UCITS Directive, the FSA will give the Host State Regulator a Consent Notice within three months unless it has reason to doubt the adequacy of a UK firm's resources or its administrative structure;(b) if the UK firm'sEEA right derives from the Insurance Directives, the FSA will
A UK firm cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the Act).The conditions are that:(1) the
4An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may provide cross border services in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention in SUP 13.4.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative5.
4An exempt professional firm which is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FSA under article 93 of the Regulated Activities Order may provide cross border services in another EEA State under the Insurance Mediation Directive (see PROF 7.2).
If a UK firm has given the FSA a notice of intention in the required form, then:(1) if the UK firm'sEEA right derives from the Investment Services Directive, the Banking Consolidation Directive or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention to the Host State Regulator within one month of receipt; or(2) (a) if the UK firm'sEEA right derives from theInsurance Directives, paragraph 20(3A) of
(1) The removal of the exclusion for groups and joint enterprises in article 69 of the Regulated Activities Order (Groups and joint enterprises) may have implications for a company providing services for:(a) other members of its group; or(b) other participants in a joint enterprise of which it is a participant.(2) Such companies might typically provide risk or treasury management or administration services which may include regulated activities relating to a contract of insurance.
Article 4(4A) of the Regulated Activities Order (Specified activities: general) disapplies certain exclusions where a person, for remuneration, takes up or pursues insurance mediation (as defined in article 2.3 of the IMD (see PERG 5.2.5 G (Approach to implementation of the IMD) and PERG 5.16.2 G (Text of article 2.3 of the Insurance Mediation Directive)) in relation to a risk or commitment located in an EEA state. The relevant exclusions which are disapplied are:(1) arrangements
Although the article 67 exclusion is disapplied (by article 4(4A) of the Regulated Activities Order (Specified investments: general)) when a person takes up or pursues insurance mediation or reinsurance mediation as defined by articles 2.3 and 2.5 of the IMD, there may be cases where a person is not carrying on activities that amount to insurance mediation. For example, where a person's activities amount simply to the provision of information on an incidental basis in the context
Article 67 may also apply to activities relating to assignments of insurance policies, as, in the FSA's view, article 2.3 of the IMD applies essentially to the creation of new contracts of insurance and not the assignment of rights under existing policies. As such, where a solicitor or licensed conveyancer arranges an assignment of a contract of insurance, the exclusion in article 67 remains of potential application. For similar reasons, trustees advising on or arranging assignments
In the opinion of the European Commission (and in the wording of the Single Market Directives) "only activities carried on within the territory of another Member State should be the subject of prior notification" (Commission interpretative communication: Freedom to provide services and the interests of the general good in the Second Banking Directive (97/C 209/04)). In determining, for the purposes of notification, whether a service is to be provided 'within' another EEA State,
The key distinction in relation to temporary activities is whether a firm should make its notification under the freedom of establishment in a Host State, or whether it should notify under the freedom to provide services into a Host State. It would be inappropriate to discuss such a complex issue in guidance of this nature. It is recommended that, where a firm is unclear on the distinction, it should seek appropriate advice. In either case, where a firm is carrying on activities
The FSA considers that, in order to comply with Principle 3:Management and control (see PRIN 2.1.1 R), a firm should have appropriate procedures to monitor the nature of the services provided to its customers. Where a UK firm has non-resident customers but has not notified the EEA State in which the customers are resident that it wishes to exercise its freedom to provide services, the FSA would expect the firm's systems to include appropriate controls. Such controls would include
Text of article 2.3 of the Insurance Mediation Directive"'Insurance mediation' means the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim.These activities when undertaken by an insurance undertaking or an employee of an insurance undertaking who is acting under the
The following Tables 1, 2, 2A and 2B1 provide an outline of the regulated activities and specified investments that may be of relevance to firms considering undertaking passported activities under the Banking Consolidation Directive, 1the Investment Services Directive, the UCITS Directive and the Insurance Mediation Directive.1 The tables may be of assistance to UK firms that are thinking of offering financial services in another EEA State and to EEA firms that may offer those
The tables provide a general indication of the investments and activities specified in the Regulated Activities Order that may correspond to categories provided for in the Banking Consolidation Directive, 1the Investment Services Directive, the UCITS Directive or the Insurance Mediation Directive1. The tables do not provide definitive guidance as to whether a firm is carrying on an activity that is capable of being passported, nor do the tables take account of exceptions that
Table 2B: IMD Activities |
Part II RAO Activities |
Part III RAO Investments |
|
1. |
Introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance. |
Articles 25, 53 and 64 |
Articles 75, 89 (see Note 1) |
2. |
Concluding contracts of insurance |
Articles 21, 25, 53 and 64 |
Articles 75, 89 |
3. |
Assisting in the administration and performance of contracts of insurance, in particular in the event of a claim. |
Articles 39A, 64 |
Articles 75, 89 |
Note 1. Rights to or interests in life policies are specified investments under Article 89 of the Regulated Activities Order, but rights to or interests in general insurance contracts are not. |
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(1) Under the Gibraltar Order made under section 409 of the Act, a Gibraltar firm is treated as an EEA firm under Schedule 3 to the Act if it is:(a) authorised in Gibraltar under the Insurance Directives; or(b) authorised in Gibraltar under the Banking Consolidation Directive.(2) A Gibraltar insurance companyis allowed to passport its services into the United Kingdom if it complieswith the relevant notification procedures. Similarly, a Gibraltar credit institution is allowed to
In addition, the chapter does not give guidance on the procedures for making an application for top-up permission, to carry on regulated activities in the United Kingdom which are outside the scope of the Single Market Directives and for which the firm cannot exercise Treaty rights. Incoming EEA firms seeking a top-up permission should refer to AUTH 5.
This chapter applies to a UK firm, that is, a person whose head office is in the United Kingdom and which is entitled to carry on an activity in another EEA State subject to the conditions of a Single Market Directive. Such an entitlement is referred to in the Act as an EEA right and its exercise is referred to in the Handbook as passporting.1
This chapter also applies to a UK firm which wishes to establish a branch in, or provide cross border services into, Gibraltar. The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 provides that a UK firm is to be treated as having an entitlement corresponding to its EEA right, to establish a branch in, or provide cross border services into, Gibraltar under any of the Single Market Directives. So, references in this chapter to an EEA State or an EEA right include
A UK firm wishing to provide cross border services into a particular EEA State for the first time under an EEA right must include, in its notice of intention given to the FSA:(1) if the UK firm is passporting under the Investment Services Directive or the Insurance Directives, the information specified in SUP 13 Annex 3;(2) if the UK firm is passporting under the Banking Consolidation Directive, the activities which it intends to carry on.(3) if the UK firm is passporting under
A notice of intention may include activities within the scope of the relevant Single Market Directive which are not regulated activities (paragraphs 19(3) and 20(2) of Part III of Schedule 3 to the Act). Regulation 19 of the EEA Passport Rights Regulations states that where a UK firm is able to carry on such an unregulated activity in the EEA State in question without contravening any law of the United Kingdom (or any part of the United Kingdom) the UK firm is treated, for the
(1) CASS 5.1 to CASS
5.6 apply, subject to (2), (3) and CASS 5.1.3 R to CASS 5.1.6 R, to a firm that receives
or holds money in the course
of or in connection with its insurance mediation
activity.(2) CASS 5.1 to CASS
5.6 do not, subject to (3), apply:(a) to
a firm to the extent that it
acts in accordance with the CASS 4; or(b) to
a firm in carrying on an insurance mediation activity which is in
respect of a reinsurance contract;
or(c) to
an insurance undertaking in
respect of
(1) Principle 10 (Clients' assets) requires a firm to arrange adequate protection for clients' assets when the firm is
responsible for them. An essential part of that protection is the proper accounting
and handling of client money.
The rules in CASS 5.1 to CASS
5.6 also give effect to the requirement in article 4.4 of the IMD that all necessary measures should
be taken to protect clients against
the inability of an insurance intermediary to
transfer premiums to an insurance
Where a UK firm is exercising an EEA right, other than under the Insurance Mediation Directive (see SUP 13.6.9A G) , and has established a branch in another EEA State, any changes to the details of the branch are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that, under regulation 18, contravention of the prohibition imposed by regulation
5A UK firm exercising its EEA right under the Insurance Mediation Directive to establish a branch in another EEA State is not required to supply requisite details or relevant details. Therefore there are no requisite details or relevant details for changes to a branch established in another EEA State under the Insurance Mediation Directive.
A UK firm should be aware that the guidance is the FSA's interpretation of the Single Market Directives, the Act and the legislation made under the Act. The guidance is not exhaustive and is not a substitute for firms consulting the legislation or taking their own legal advice in the United Kingdom and in the relevant EEA States.
In some circumstances, a UK firm that is carrying on business which is outside the scope of the Single Market Directives has a right under the Treaty to carry on that business. For example, an insurer carrying on both direct insurance and reinsurance businessis not covered by the Insurance Directives in respect of the reinsurance element. Itmay, however, have rights under the Treaty in respect of its reinsurance business. Such UK firms may wish to consult with the FSA on their
Threshold condition 2(1) and (2) (Location of offices), implement the requirements of article 6 of the Post BCCI Directive and threshold condition 2(3) and (4) implements article 2.9 of the Insurance Mediation Directive, although the Act extends threshold condition 2 to firms which are outside the scope of the Single Market Directives and the UCITS Directive.1
Neither the Post BCCI Directive, the Insurance Mediation Directive nor the Act define what is meant by a firm's 'head office'. This is not necessarily the firm's place of incorporation or the place where its business is wholly or mainly carried on. Although the FSA will judge each application on a case-by-case basis, the key issue in identifying the head office of a firm is the location of its central management and control, that is, the location of: 1(1) the directors and other