Related provisions for DISP App 1.6.13

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PERG 5.6.12GRP
Article 28 of the Regulated Activities Order (Arranging transactions to which the arranger is a party) excludes from the regulated activities in article 25(1) and 25(2) arrangements made for or with a view to contracts of insurance when:(1) the person (P) making the arrangements is the only policyholder; or(2) P, as a result of the transaction, would become the only policyholder.
PERG 5.6.15GRP
In some cases, a person may make arrangements to enter into a contract of insurance as policyholder on its own behalf and also arrange that another person become a policyholder under the same contract of insurance. If so, the person should be aware that the effect of the narrower exclusion in article 28 as part of implementation of the IMD is that he may be arranging on behalf of the other policyholder. This may be relevant, for example, to a company which arranges insurance
PERG 5.6.16GRP
The restriction in the scope of article 28 raises an issue where there is a trust with co-trustees, where each trustee will be a policyholder with equal rights and obligations. If the activities of one of the trustees include arranging in respect of contracts of insurance, that trustee could be viewed as arranging on behalf of his co-trustees who will also be policyholders. Similar issues also arise in respect of trustees assisting in the administration and performance of a contract
INSPRU 1.2.29RRP
For the purpose of 3INSPRU 1.2.28R (1)(c)3, benefits payable include:(1) all guaranteed benefits including guaranteed surrender values and paid-up values;(2) vested, declared and allotted bonuses to which the policyholder is entitled;(3) all options available to the policyholder under the terms of the contract; and(4) discretionary benefits payable in accordance with the firm's regulatory duty to treat its customers fairly.
INSPRU 1.2.62RRP
When a firm establishes its mathematical reserves in respect of a long-term insurance contract, the firm must include an amount to cover any increase in liabilities which might be the direct result of its policyholder exercising an option under, or by virtue of, that contract of insurance. Where the surrender value of a contract is guaranteed, the amount of the mathematical reserves for that contract at any time must be at least as great as the value guaranteed at that time.
INSPRU 1.2.70RRP
(1) Where a policyholder may opt to be paid a cash amount, or a series of cash payments, the mathematical reserves for the contract of insurance7 must be sufficient to ensure that the payment or payments could be made solely from:(a) the assets covering those mathematical reserves; and(b) the resources arising from those assets and from the contract itself.(2) In (1) references to a cash amount or a series of cash payments include the amount or amounts likely to be paid on a voluntary
INSPRU 1.2.72GRP
INSPRU 1.2.71R (1) applies only to accumulating with-profits policies; INSPRU 1.2.71R (2) applies to any other type of policy, including non-profit insurance contracts. In INSPRU 1.2.71R (1)(a) a firm must take into consideration, for example, a market value adjustment where such an adjustment has been described in representations made to policyholders by the firm. However, any discretionary adjustment, such as a market value adjustment, must not be included in the amount calculated
PERG 5.8.6GRP
For the purposes of article 53(1)2, advice must be given to a person in his capacity as an investor or potential investor (which, in the context of contracts of insurance, will mean as policyholder or potential policyholder). So, article 53(1)2 will not apply where advice is given to persons who receive it as:(1) an adviser who will use it only to inform advice given by him to others; or(2) a journalist or broadcaster who will use it only for journalistic purposes.
PERG 5.8.7GRP
Advice will still be covered by article 53(1)2 even though it may not be given to any particular policyholder (for example, advice given in a periodical publication or on a website).
PERG 5.3.10GRP
A person will have rights under a contract of insurance when he is a policyholder. The question of whether a person has rights under a contract of insurance may require careful consideration in the case of group policies (with reference to the Glossary definition of policyholder). In the case, in particular, of general insurance contracts and pure protection contracts, the existence or otherwise of rights under such policies may be relevant to whether a person is carrying on
SUP 18.2.37GRP
The independent expert is not expected to comment on the likely effects on new policyholders, that is, those whose contracts are entered into after the effective date of the transfer.
PERG 5.7.1GRP
The regulated activity of assisting in the administration and performance of a contract of insurance (article 39A) relates, in broad terms, to activities carried on by intermediaries after the conclusion of a contract of insurance and for or on behalf of policyholders, in particular in the event of a claim. Loss assessors acting on behalf of policyholders in the event of a claim are, therefore, likely in many cases to be carrying on this regulated activity. By contrast, claims
ICOBS 8.1.1RRP
1An insurer must:(1) handle claims promptly and fairly;(2) provide reasonable guidance to help a policyholder make a claim and appropriate information on its progress; (3) not unreasonably reject a claim (including by terminating or avoiding a policy); and(4) settle claims promptly once settlement terms are agreed.
PERG 5.11.3GRP
The exclusions outlined in (1) to (7) were available to intermediaries (and in some cases insurance undertakings) acting in connection with life policies before 14 January 2005. In essence, however, the following exclusions do not apply if they concern transactions relating to contracts of insurance:(1) dealing in investments as agent with or through authorised persons (article 22 of the Regulated Activities Order (Deals with or through authorised persons));(2) arranging transactions
PERG 2.8.6AGRP
3The exclusions in the Regulated Activities Order that relate to the various arranging activities are as follows.(-1) 8Under Article 24A(2), an activity that would otherwise be both arranging and bidding in emissions auctions is specifically excluded from arranging because the activity of bidding in emissions auctions does not form part of any other regulated activity (see PERG 2.7.6D G).(1) Under article 26, arrangements that do not or would not bring about the transaction to
PERG 2.8.7BGRP
The following exclusions from assisting in the administration and performance of a contract of insurance also apply to a person in specified circumstances:(1) while acting as trustee or personal representative (see PERG 2.9.3 G); or(2) in connection with the carrying on of a profession or of a business not otherwise consisting of regulated activities (see PERG 2.9.5 G); or(3) as an incoming ECA provider (see PERG 2.9.18 G); or(4) as a provider of non-motor goods or services related
PERG 2.8.8GRP
The exclusions from the regulated activity of safeguarding and administering investments are as follows.(1) Safeguarding and administration activities carried on by one person are excluded if a specified third party undertakes a responsibility for the assets which is no less onerous than it would have been if he were doing the safeguarding and administration himself. The effect of this is that an authorised person with permission to carry on this regulated activity (or in certain
PERG 6.7.15GRP
A manufacturer or retailer may undertake an obligation to ensure that the customer becomes a party to a separate contract of insurance in respect of the goods sold. This would include, for example, a contract for the sale of a freezer, with a simple warranty in relation to the quality of the freezer, but also providing insurance (underwritten by an insurer and in respect of which the customer is the policyholder) covering loss of frozen food if the freezer fails. The FCA is unlikely
ICOBS 6.1.12GRP
Under Principle 7, a firm that sells a group policy should provide appropriate information to the customer to pass on to other policyholders. It should tell the customer that he should give the information to each policyholder.
ICOBS 8.3.3GRP
(1) Principle 8 requires a firm to manage conflicts of interest fairly. SYSC 10 also requires an insurance intermediary to take all reasonable steps to identify conflicts of interest, and maintain and operate effective organisational and administrative arrangements to prevent conflicts of interest from constituting or giving rise to a material risk of damage to its clients. 1(2) [deleted]11(3) If a firm acts for a customer in arranging a policy, it is likely to be the customer's
SUP App 2.8.1RRP
If a firm (whether within or outside the scope of the Solvency II Directive)2 decides to cease to effect new contracts of insurance, it must, within 28 days of that decision, submit a run-off plan to the FCA3 including: (1) a scheme of operations; and (2) an explanation of how, or to what extent, all liabilities to policyholders (including, where relevant, liabilities which arise from the regulatory duty to treat customers fairly in setting discretionary benefits) will be met
PERG 5.15.4GRP

Types of activity – are they regulated activities and, if so, why?

Type of activity

Is it a regulated activity?

Rationale

MARKETING AND EFFECTING INTRODUCTIONS

Passive display of information -for example, medical insurance brochures in doctor’s surgery (whether or not remuneration is received for this activity)

No.

Merely displaying information does not constitute making arrangements under article 25(2) (see PERG 5.6.4 G).

Recommending a broker/insurance undertaking and providing customer with contact details (whether by phone, fax, e-mail, face-to-face or any other means of communication)

Yes, but article 72C may be available.

This will constitute making arrangements under article 25(2). But, the exclusion in article 72C will apply if all the intermediary does is supply information to the customer and the conditions of article 72C are otherwise met (see PERG 5.6.5 G to PERG 5.6.9 G). Generally, this will not amount to advice under article 53(1)1 unless there is an implied recommendation of a particular policy (see PERG 5.8.4 G), in which case article 72C would not be available.

Providing an insurance undertaking/broker with contact details of customer

Yes.

This will constitute making arrangements under article 25(2) when undertaken in the context of regular or ongoing arrangements for introducing customers. Article 72C will not apply because the information is supplied to someone other than the policyholder or potential policyholder.

Marketing on behalf of insurance undertaking to intermediaries only (for example, broker consultants)

Yes.

This amounts to work preparatory to the conclusion of contracts of insurance and so constitutes making arrangements under article 25(2). Article 72C is not available because this activity does not involve provision of information to the policyholder or potential policyholder only.

Telemarketing services (that is, companies specialising in marketing an insurance undertaking's products/services to prospective customers)

Yes.

This amounts to introducing and/or other work preparatory to the conclusion of contracts of insurance and so constitutes making arrangements under article 25(2). This could also involve article 25(1) arranging where the telemarketing company actually sells a particular policy and could involve advising on investments. Article 72C will not be available where the provision of information is more than incidental to the telemarketing company’s main business or where the telemarketing company is advising on investments.

PRE-PURCHASE DISCUSSIONS WITH CUSTOMERS AND ADVICE

Discussion with client about need for insurance generally/need to take out a particular type of insurance

Generally, no. Article 72C available if needed.

Not enough, of itself, to constitute making arrangements under article 25(2), but you should consider whether, viewed as a whole, your activities might amount to arranging. If so, article 72C might be of application (see PERG 5.6.5 G to PERG 5.6.9 G).

Advising on the level of cover needed

Generally, no. Article 72C available if needed.

Not enough, of itself, to constitute making arrangements under article 25(2), but you should consider whether, viewed as a whole, your activities might amount to making arrangements under article 25(2) (see PERG 5.8.3 G). If so, article 72C might be of application (see PERG 5.6.5 G to PERG 5.6.9 G).

Pre-purchase questioning in the context of filtered sales (intermediary asks a series of questions and then suggests several policies which suit the answers given)

Yes. Subject to article 72 C exclusion where available.

This will constitute arranging although article 72C may be of application (see PERG 5.6.5 G to PERG 5.6.9 G). If there is no express or implied recommendation of a particular policy, this activity will not amount to advice under article 53(1)1 (see PERG 5.8.15 G to PERG 5.8.19 G).

Explanation of the terms of a particular policy or comparison of the terms of different policies

Possibly. Article 72C available.

This is likely to amount to making arrangements under article 25(2). In certain circumstances, it could involve advising on investments (except P2P agreements)1 (see PERG 5.8.8 G (Advice or information)). Where the explanation is provided to the potential policyholder, and does not involve advising on investments (except P2P agreements)1, article 72C may be of application (see PERG 5.6.5 G to PERG 5.6.9 G), and where information is provided by a professional in the course of a profession, article 67 may apply (see PERG 5.11.9 G to PERG 5.11.12 G).

Advising that a customer take out a particular policy

Yes.

This amounts to advice on the merits of a particular policy under article 53(1)1 (see PERG 5.8.4 G to PERG 5.8.5 G).

Advising that a customer does not take out a particular policy

Yes.

This amounts to advice on the merits of a particular policy under article 53(1)1 (see PERG 5.8.4 G to PERG 5.8.5 G).

Advice by journalists in newspapers, broadcasts etc.

Generally, no because of the article 54 exclusion.

Article 54 provides an exclusion for advice given in newspapers etc (see PERG 5.8.24 G to PERG 5.8.25 G).

Giving advice to a customer in relation to his buying a consumer product, where insurance is a compulsory secondary purchase and/or a benefit that comes with buying the product

Not necessarily but depends on the circumstances.

Where the advice relates specifically to the merits of the consumer product, it is possible that references to the accompanying insurance may be seen to be information and not advice. If, however, the advice relates, in part, to the merits of the insurance element, then it will be regulated activity.

ASSISTING CUSTOMERS WITH COMPLETING/SENDING APPLICATION FORMS

Providing information to customer who fills in application form

Possibly. Subject to article 67 or 72C exclusions where available.

This activity may amount to arranging although the exclusions in article 67 (see PERG 5.11.9 G to PERG 5.11.12 G) and article 72C (see PERG 5.6.5 G to PERG 5.6.9 G) may be of application.

Helping a potential policyholder fill in an application form

Yes.

This activity amounts to arranging. Article 72C will not apply because this activity goes beyond the mere provision of information to a policyholder or potential policyholder (see PERG 5.6.5 G to PERG 5.6.9 G).

Receiving completed proposal forms for checking and forwarding to an insurance undertaking (for example, an administration outsourcing service provider that receives and processes proposal forms)

Yes.

This amounts to arranging. Article 72C does not apply because this activity goes beyond the mere provision of information to a policyholder or potential policyholder (see PERG 5.6.5 G to PERG 5.6.9 G).

Assisting in completion of proposal form and sending to insurance undertaking

Yes.

This activity amounts to arranging. Article 72C does not apply because this activity goes beyond the mere provision of information (see PERG 5.6.5 G to PERG 5.6.9 G).

NEGOTIATING AND CONCLUDING CONTRACTS OF INSURANCE

Negotiating terms of policy on behalf of a customer with the insurance undertaking

Yes.

This activity amounts to arranging (see PERG 5.6.2 G).

Negotiating terms of policy on behalf of insurance undertaking with the customer and signing proposal form on his behalf

Yes.

These activities amount to both arranging and dealing in investments as agent.

Concluding a contract of insurance on insurance company’s behalf, for example, motor dealer who has authority to conclude insurance contract on behalf of insurance undertaking when selling a car

Yes.

A person carrying on this activity will be dealing in investments as agent. He will also be arranging (as the article 28 exclusion only applies in the limited circumstances envisaged under article 28(3)) (see PERG 5.6.12 G).

Agreeing, on behalf of a prospective policyholder, to buy a policy.

Yes.

A person who, with authority, enters into a contract of insurance on behalf of another is dealing in investments as agent under article 21, and will also be arranging.

Providing compulsory insurance as a secondary purchase

Yes. It will amount to dealing in investments as agent or arranging.

The fact that the insurance is secondary to the primary product does not alter the fact that arranging the package involves arranging the insurance.

COLLECTION OF PREMIUMS

Collection of cheque for premium from the customer at the pre-contract stage.

Yes (as part of arranging).

This activity is likely to form part of arranging. But the mere collection/receipt of premiums from the customer is unlikely, without more, to amount to arranging.

Collection of premiums at post-contract stage

No.

The mere collection of premiums from policyholders is unlikely, without more, to amount to assisting in the administration and performance of a contract of insurance.

MID-TERM ADJUSTMENTS AND ASSIGNMENTS

Solicitors or licensed conveyancers discharging client instructions to assign contracts of insurance.

Not where article 67 applies.

As the assignment of rights under a contract of insurance (as opposed to the creation of new contracts of insurance) does not fall within the IMD, article 67 is of potential application (see PERG 5.11.9 G to PERG 5.11.12 G).

Making mid-term adjustments to a policy, for example, property manager notifies changes to the names of the leaseholders registered as “interested parties” in the policy in respect of the property.

Yes.

Assuming the freeholder (as policyholder) is obliged under the terms of the policy to notify the insurance undertaking of changes to the identity of the leaseholders, the property manager is likely to be assisting in the administration and the performance of the contract of insurance.

TRADED ENDOWMENT POLICIES (“TEPs”)

Making introductions for the purposes of selling TEPs

Yes, unless article 72C applies.

Making introductions for these purposes is arranging unless article 72C applies (see PERG 5.6.5 G to PERG 5.6.9 G). The exclusions in article 29 (Arranging deals with or through authorised persons) and 33 (Introducing) no longer apply to arranging contracts of insurance.

Market makers in TEPs

Yes, although the exclusion in article 28 may apply.

Unauthorised market makers can continue to make use of the exclusions in articles 15 (Absence of holding out etc.) and 16 (Dealing in contractually based investments), where appropriate. In order to avoid the need for authorisation in respect of arranging they may be able to rely upon article 28 (see PERG 5.6.12 G).

ASSISTING POLICYHOLDER WITH MAKING A CLAIM

Merely providing information to the insured to help him complete a claim form

No.

Of itself, this is likely to amount to assisting in the administration but not the performance of a contract of insurance. In the FCA's view, the provision of information in these circumstances is more akin to facilitating performance of a contract of insurance rather than assisting in the performance (see PERG 5.7.3 G to PERG 5.7.5 G)

Completion of claim form on behalf of insured

Potentially.

This activity amounts to assisting in the administration of a contract of insurance. Whether this activity amounts to assisting in the administration and performance of a contract of insurance will depend upon whether a person's assistance in filling in a claims form is material to whether performance of the contractual obligation to notify a claim takes place (see PERG 5.7.2 G to PERG 5.7.3 G).

Notification of claim to insurance undertaking and helping negotiate its settlement on the policyholder's behalf

Yes.

This activity amounts to assisting in the administration and performance of a contract of insurance (see PERG 5.7.4 G).

ASSISTING INSURANCE UNDERTAKING WITH CLAIMS BY POLICYHOLDERS

Negotiation of settlement of claims on behalf of an insurance undertaking

No.

Claims management on behalf of an insurance undertaking does not amount to assisting in the administration and performance of a contract of insurance by virtue of the exclusion in article 39B (see PERG 5.7.7 G).

Providing information to an insurance undertaking in connection with its investigation or assessment of a claim

No.

This activity does not amount to assisting in the administration and performance of a contract of insurance.

Loss adjusters and claims management services (for example, by administration outsourcing providers)

Potentially.

These activities may amount to assisting in the administration and performance of a contract of insurance. Article 39B excludes these activities, however, when undertaken on behalf of an insurance undertaking only (see PERG 5.7.7 G).

Providing an expert appraisal of a claim

No.

This activity does not amount to assisting in the administration and performance of a contract of insurance whether carried out on behalf of an insurance undertaking or otherwise.

Jeweller repairs customer’s jewellery pursuant to a policy which permits the jeweller to carry out repairs

No.

This activity does not amount to assisting in the administration and performance of a contract of insurance. It amounts to managing claims on behalf of an insurance undertaking and so falls within the exclusion in article 39B (see PERG 5.7.7 G).
PERG 2.9.19GRP
The exclusions in this group apply to certain regulated activities involving certain contracts of insurance. The exclusions and the regulated activities to which they apply are as follows.(1) The first exclusion of this kind relates to certain activities carried on by a provider of non-motor goods or services related to travel in connection with general insurance contracts only. The contracts must be for five years duration or less and have an annual premium of no more than 500.