Here we list some typical misconceptions about the way we authorise insurance sellers. Then we give you the facts.
Linked insurance – common misunderstandings
✘ A retailer doesn’t need a separate permission for linked insurance sales.
✔ The connected contracts exclusion may be of use during the period when you have interim permission. However, once you become authorised, this exclusion will apply only if you supply goods (other than motor vehicles) or travel-related services, and the rest of your business isn’t involved in regulated activities. If a substantial portion of your sales are financed by credit, it’s unlikely the exclusion will apply to you.
✘ A firm requiring an insurance permission also needs full authorisation.
✔ You can serve as an appointed representative for insurance distribution with limited permission for credit activities. But you can’t fulfil this role if you’re authorised with full credit permissions. Combining limited credit permission with full permission for insurance (or other regulated activities) isn’t possible either.
✘ A firm with a credit permission needs a separate permission if it offers, arranges or advises on insurance policies – even if it already requires credit permission.
✔ This is often the case, but not always. If your firm provides non-motor goods or certain travel services, and also offers, arranges or advises on related insurance contracts as a sideline of its main business, you might not require authorisation for these activities. However, you’ll need to be eligible for the connected contracts exclusion outlined in Article 72B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. In order to secure this exclusion, your main line of business can’t involve any regulated activities, apart from those you have interim permission for.
To offer one example, the main business of a retailer might involve the sale of goods or non-financial services. But if a substantial proportion of its sales are financed by credit which it arranges, it’s unlikely that the regulated activities will be incidental to its business.
✘ It’s impossible to become an appointed insurance representative without the connected contracts exclusion.
✔ Two options are open to you if you’re ineligible for the connected contracts exclusion. Either you can seek the relevant permissions for any regulated insurance activities. Or, if you have limited permission for credit activities, it might be possible to become an appointed representative of a firm with the relevant insurance permission. Just remember that this second route won’t be available if you hold a full credit permission.
- For more about the connected contracts of insurance exclusion, see sections 5.11.13 to 5.11.15 of our Perimeter Guidance Manual
- Discover which people involved in regulated activities don’t require authorisation
- For more about appointed representatives with limited permission to carry out credit activities, see sections 12.2.2A and 12.2.2B of our Handbook
- To find out how COND applies to credit firms with limited permission, see section 1.1A.5A of our Handbook