FSA warns against delay

The Financial Services Authority has warned brokers it is time to take action, as applications for regulation should be submitted by mid-July 2004 in order to be processed by 14 January 2005.

Sarah Wilson, director of the high-street firms division at the FSA, told delegates at the Professional Broking Roadshows that the consultation period is almost complete. He said the regulator had entered its second phase - the application process. He added that although regulation starts in January 2005, the FSA can take six months to process brokers' applications under the Financial Services and Markets Act.

Wilson said: "We hope to turn around applications more quickly than this but brokers must think carefully about the options available. The key issue is timing. Brokers do not have to be compliant at the time of application but must be in the position to comply by the time of regulation. We have streamlined the application process to 30 pages of mostly tick-box questions and plan to process applications within weeks."

Brokers can now register to apply and the FSA has opened a dedicated call centre to handle queries. It will start accepting completed applications from mid-January.

An example of the electronic application form will soon be available on its website. Firms applying online will receive a log-in number following registration. Firms that are already authorised will need to apply for a variation petition and do not need to register but will be contacted by their current supervisor.

The FSA expects the number of firms it regulates to treble to around 36,000 and is conducting research on the future population of firms.

- How many brokers are likely to become appointed representatives?

Only a very small number - no more that 100 of our 4000 agencies. It may be popular with the networks.

Paul Dyer, marketing director, Towergate

- Will the application form be more onerous for large brokers?

Large brokers will be required to fill in additional forms. This is intended to find out more about the nature of the business and is not meant to be more onerous.

Sarah Wilson, director of the high-street firms division, Financial Services Authority

- If you are not approved by 14 January, what happens if a customer rings with an enquiry?

It will be illegal to trade. Insurers need to find out the intention of firms. We will let brokers know as soon as we can, following the submission of their application, whether we are minded to approve the application. This will allow people to plan accordingly.

Sarah Wilson

- Do we have to go into specific detail about insurers' policies in the suitability statement if we recommend them?

You are not trying to give them the best possible product or the cheapest, just the most suitable. If you recommend someone you don't need to go to great lengths to justify this as long as you have reflected the customer's needs. We have tried to be as minimalist as possible.

Eleanor Linton, head of policy at the high-street firms division, FSA.