All or nothing

Under Financial Services Author-ity rules, a firm cannot be an appointed representative for part of its business and directly authorised for the remainder. If you are a member of a life or mortgage-based network, it is possible that that network holds insufficient general insurance agencies to be of interest to the firm. By remaining as an appointed representative without direct FSA authorisation, the firm would not be able to hold its own general insurance agency facilities and, unless agreed with its principal, would be unable to deal directly with any general insurers or other intermediaries in the new regulated environment.

Assuming that it would not be appropriate for the general side of the business to become an appointed representative of the network, the options are as follows.

Explore the possibility of becoming multi-tied. This would not only need the agreement of the existing principal, but also the firm would have to find new general insurers or wholesalers prepared to offer such a facility.

Current evidence of market practice suggests this may be difficult, unless volume is offered.

Sell the general business to a firm that is applying for authorisation and see if the deal can be structured to continue to operate as an introducer.

It must be borne in mind that the value of a book of 'soon to be unregulated' business may devalue as January 2005 approaches and acting as introducer status after this date will not always be easy to achieve.

Form the general side into a separate company. If this route is chosen, time is of the essence, bearing in mind the early-bird discount for applications expires on 31 May, and to ensure a response from the FSA, the application must be submitted by 14 July.

If the final route is chosen, the principals of the firm must very quickly get 'up to speed' with the requirements of regulation to ensure that all the elements will be met.

With time running out to submit application forms and the discounts already having been missed if applying for both mortgage and general insurance permissions, you may be well advised to seek appropriate external advice and support in any compliance preparation and planning.