Small Mortgage and Insurance Intermediaries: Part I - General Rules

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MIGI 1

Introduction

MIGI 1.1

Purpose of the Guide

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MIGI 1.1.1

handbook-guidance
The Guide to the FSA Handbook for Small Mortgage and Insurance Intermediaries (the Guide) is primarily intended for small intermediary firms carrying on:
(1) mortgage mediation activities in relation to regulated mortgage contracts; or
(2) insurance mediation activities in relation to general insurance contracts or pure protection contracts (except long term care insurance), collectively known as 'non-investment insurance contracts'; or
(3) both;
from a permanent place of business in the UK.

MIGI 1.1.2

handbook-guidance
In this Guide, references to mortgage and insurance intermediaries refer to firms carrying on the activities set out in (1) and (2) above, respectively, unless otherwise stated.

MIGI 1.1.3

handbook-guidance
Since 31 October 2004 we (the FSA) have been responsible for regulating mortgage intermediaries, and since 14 January 2005 we have regulated insurance intermediaries. This Guide will help small mortgage and insurance intermediaries to find the rules in the FSA Handbook of rules and guidance (the Handbook) that apply to them. The Guide refers to, and contains extracts from, various parts of the Handbook. Firms should consult the Handbook to determine the precise wording and effect of the rules. In addition, firms may need to refer to the Financial Services and Markets Act 2000 (the FSMA).

MIGI 1.1.4

handbook-guidance
Not every mortgage or insurance intermediary does identical business or is permitted to carry on the same type of activities. This Guide directs firms to those parts of the Handbook that will usually be relevant to typical small mortgage and insurance intermediaries that have simple organisational structures and do not carry on any regulated activities other than mortgage or insurance mediation activities.

MIGI 1.1.5

handbook-guidance
As well as firms whose principal business is carrying on insurance mediation activities, this Guide will also help small firms carrying on insurance mediation activities as a secondary activity, provided that their main business is not regulated by us. This would include, for example, mobile phone retailers who also sell mobile phone insurance but no other kinds of insurance.

MIGI 1.1.6

handbook-guidance
Some aspects of the Handbook do not apply to small firms and so are not covered in any detail, if at all, in this Guide. As such, if your firm is large, or has a complex organisational structure, there may be other rules that apply to you that are not referred to in the Guide.

MIGI 1.1.7

handbook-guidance
Similarly, the Guide does not cover many of the rules that apply to firms that are authorised or require authorisation for investment business, such as IFAs and firms that carry on insurance mediation activities in relation to life policies. Nor does it cover many of the rules that apply to insurance companies and mortgage lenders. These firms will need to consult other sources of information to identify the rules that apply to them. Small IFAs might find the FSA guide Using the FSA Handbook: an overview for small IFA firms helpful.

MIGI 1.1.8

handbook-guidance
Although the Guide is primarily intended for authorised firms, we are aware that many small firms carrying on mortgage or insurance mediation are appointed representatives (ARs). Part I, Chapter 9 of the Guide explains how ARs carrying on these regulated activities are regulated, and there are references elsewhere in the Guide to some of the requirements that apply either to ARs directly or to firms with ARs. However, the Guide does not cover all of the rules that apply to networks and other firms with ARs.

MIGI 1.1.9

handbook-guidance
Whether or not you are a small mortgage or insurance intermediary, this Guide is only a tool to help you navigate and understand the Handbook and to find the rules that are relevant to your firm. It is not a substitute for reading the rules themselves and is not a comprehensive statement of your firm's obligations under our rules. You should use it to help guide you through the most relevant aspects of our regulatory regime.

MIGI 1.1.10

handbook-guidance
This Guide is not formal guidance and does not have the status of guidance in the Handbook. You cannot use this Guide to counter a charge of breaking our rules. In the event of any conflict between this Guide and the Handbook, the Handbook takes precedence.

MIGI 1.1.11

handbook-guidance
The Guide is current as at 31 March 2005. This Guide does not remove the need for firms to keep up to date with regulatory developments and to consider the potential impact on their business of proposed changes. We will regularly update this Guide but we will not update it each time the Handbook changes.
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MIGI 1.2

Structure of the Guide

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MIGI 1.2.1

handbook-guidance
The Guide is in three Parts:
(1) Part I (this Part) covers all the sections of the Handbook that apply to mortgage and insurance intermediaries other than conduct of business, training and competence and client money rules. Chapter 2 of this Part gives a general explanation of the structure of the Handbook, what parts apply to small insurance and mortgage intermediaries and how to interpret the provisions of the Handbook.
(2) Part II covers the conduct of business and training and competence rules for mortgage intermediaries.
(3) Part III covers the conduct of business, training and competence and client money rules for insurance intermediaries.
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MIGI 1.2.2

handbook-guidance
The Guide is grouped into chapters covering the most frequent types of interaction with us and the rules that most often apply to mortgage and insurance intermediaries. The references to the Handbook and the pointers to other sections within the Guide itself are not intended to be exhaustive.
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MIGI 1.2.3

handbook-guidance
This Guide uses terms that are consistent with those defined in the Handbook Glossary. These terms are in italics in the Handbook (though not in this Guide). To help you Appendix A to this Part contains brief definitions of some of the terms we use throughout the Guide. Appendix A to Parts II and III also contain definitions of some of the terms used frequently in those Parts. In each case firms should consult the Handbook Glossary for the full definitions.

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MIGI 2

Overview of the Handbook

MIGI 2.1

Introduction

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MIGI 2.1.1

handbook-guidance
This chapter provides an overview of the Handbook and explains:
(1) which parts of the Handbook apply to mortgage and insurance intermediaries;
(2) how the Handbook is structured; and
(3) how to interpret rules, guidance and evidential provisions in the Handbook.
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MIGI 2.2

Content of the Handbook

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Where can you find the rules that apply to mortgage and insurance intermediaries?

MIGI 2.2.1

handbook-guidance
The Handbook and Tailored Handbook (see paragraph 2.2.2) can be found:
(1) on our website (www.fsa.gov.uk) and click on 'FSA Handbook':
(2) on the CD-ROM sent to all authorised firms each month.
You can buy paper copies of the full Handbook from our Publications Order Helpline or order online through our website. We update the website daily, but the CD-ROM and paper copy are only updated once a month.

MIGI 2.2.2

handbook-guidance
Only some of our rules and guidance apply to mortgage and insurance intermediaries. To make it more convenient for you, we have brought together the relevant provisions in 'Tailored Handbooks' - one for mortgage intermediaries and another for insurance intermediaries. The table below provides an overview of the Handbook for small mortgage and insurance intermediaries to highlight which parts will be most relevant to them, and where they are covered in the Guide. There will be some variation, as not all mortgage and insurance intermediaries undertake identical business or have permission to carry on the same regulated activities.

MIGI 2.2.3

handbook-guidance
Overview of contents of the Handbook:

MIGI 2.2.4

handbook-guidance
In addition, the Enforcement manual (ENF), Decision making manual (DEC) and Complaints against the FSA manual (COAF) contain information about the FSA's policies and procedures which will be of relevance to small mortgage and insurance intermediaries in certain circumstances. These manuals are not covered in the Guide but you can find further information about them on our website (www.fsa.gov.uk).

Which parts of the Handbook apply to mortgage and insurance intermediaries?

MIGI 2.2.5

handbook-guidance
The following sourcebooks are unlikely to apply to small firms doing only mortgage and insurance mediation activities:
(1) MAR (Market conduct): the requirements to ensure fair play in the market.
(2) COB (Conduct of Business): the requirements relating to business processes for firms carrying on regulated activities that are not covered by MCOB or ICOB.
(3) The interim prudential sourcebooks: these explain the financial resources requirements for firms carrying on FSA regulated activities other than mortgage and insurance mediation activities. The rules in these sourcebooks are interim rules that will be replaced in 2007.
(4) The specialist sourcebooks: these sourcebooks show how the Handbook applies to certain sectors, such as collective investment schemes and credit unions. If your firm is a member of a designated professional body, such as the Law Society, you will need to read the Professional Firms sourcebook (PROF).

How are the sourcebooks and manuals structured?

MIGI 2.2.6

handbook-guidance


Any word that is in italics in the Handbook is defined in the Handbook Glossary.

MIGI 2.2.7

handbook-guidance
There is no index to the Handbook, however our website and CD-ROM contain search facilities that can be used to find particular words and phrases.

MIGI 2.2.8

handbook-guidance
A rule at the beginning of each chapter of the Handbook identifies those firms to which it applies. For example, PRU 9.1.1R states "This section applies to a firm with a permission to carry on insurance mediation activity". So it is recommended that you read the application rule first before looking at the rest of the chapter, checking the terms in italics with the Handbook Glossary, where necessary.

MIGI 2.2.9

handbook-guidance
There are tables of information at the end of each sourcebook or manual. These are numbered consistently throughout the Handbook and provide a summary of requirements as set out below.

MIGI 2.2.10

handbook-guidance
Schedules of information at the end of each sourcebook or manual:

How do you install the CD-Rom?

MIGI 2.2.11

handbook-guidance
When you first install the CD-ROM, selecting 'Preferences' enables you to select the entire Handbook or one or more sourcebooks or manuals, so allowing you to refine your search within the Handbook. Tick each sourcebook or manual to select it for your search. You can amend your selection whenever you wish. This function does not remove any content from the CD-ROM.

MIGI 2.3

Interpreting the Handbook

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What is the difference between rules and guidance?

MIGI 2.3.1

handbook-guidance
We have prepared a Reader's Guide to help firms generally to navigate the Handbook. You can access it via the CD-ROM (by clicking on 'Handbook') and on our website at - www.fsahandbook.info/FSA/pdf/rguide.pdf.

MIGI 2.3.2

handbook-guidance
As explained more fully in the Reader's Guide, the provisions in the Handbook do not all have the same status. The difference between Rules and Guidance is important. The Rules in the Handbook (marked with an 'R') create binding obligations on firms. If a firm breaches such a rule, it may be subject to enforcement action and in some circumstances to an action for damages.
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MIGI 2.3.3

handbook-guidance
Guidance in the Handbook (marked with a 'G') is general Guidance given to more than one firm or individual. Guidance is not binding on a firm. As long as a firm follows Guidance that indicates possible means of compliance with a rule or recommends a course of action or arrangement, we intend to proceed on the basis that the firm has complied with the relevant Handbook rule. A firm may find that Guidance is a helpful indication of how compliance with a Rule may be achieved without devising its own approach to that Rule.
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MIGI 2.3.4

handbook-guidance
There are also Evidential Provisions. These are rules but they are not binding in their own right - they are marked with a status letter 'E' in the margin or header. You can find a more detailed explanation in the Reader's Guide.
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MIGI 3

The Principles and Senior Management
Arrangements, Systems and Controls

MIGI 3.1

Principles for businesses

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What are the Principles?

MIGI 3.1.1

handbook-guidance
The Principles apply to every firm. They are general statements of the main regulatory obligations of authorised firms. The Principles set out in simple terms the high level standards that all firms must meet. They express what is meant by the fit and proper standard set for firms. The rest of the Handbook contains more detailed requirements that expand on these standards.
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MIGI 3.1.2

handbook-guidance
If your firm contravenes one or more of the Principles, it could face enforcement action. This could, for example, result in your firm's authorisation being removed.
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Where are the relevant rules in the Handbook?

MIGI 3.1.3

handbook-guidance
The Principles are set out in the Principles for Businesses sourcebook (PRIN) and are also set out below:
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MIGI 3.2

Senior Management Arrangements, Systems and Controls

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What are Senior management arrangements, systems and controls?

MIGI 3.2.1

handbook-guidance
Principle 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively. This Principle is amplified by our rules in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC), which provides further details on what internal systems and controls we require regulated firms to have in place.
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MIGI 3.2.2

handbook-guidance
This means that a firm must (in line with SYSC 2 and SYSC 3):
(1) clearly apportion responsibilities amongst its directors and senior managers;
(2) ensure the business and affairs of the firm can be adequately monitored;
(3) allocate to the chief executive (if there is one), or a director or senior manager, the functions of dealing with the apportionment of responsibilities and overseeing the establishment and maintenance of systems and controls. This function may be allocated to one or more persons, but if your firm has a chief executive officer he must be one of them (or the only one if you appoint only one person);
(4) make and keep updated a record of these arrangements (for example, in an organisational chart); and
(5) take reasonable care to create and maintain such systems and controls as are appropriate to its business.
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MIGI 3.2.3

handbook-guidance
The rules and guidance in SYSC 3.2 cover some of the main issues that a firm is expected to consider in establishing and maintaining the systems and controls appropriate to its business. These include:
(1) the size of the firm, the scale and complexity of the business;
(2) the need to counter the risk that the firm might be used to further financial crime; and
(3) the need to establish and maintain compliance with regulatory requirements and record keeping.
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MIGI 3.2.4

handbook-guidance
The rules in SYSC are to a large extent intended to ensure good business practice by firms. Therefore, if your firm's business is well-run and well-organised you should find that your firm should satisfy much of what is required by SYSC.
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MIGI 3.2.5

handbook-guidance
We do not, therefore, expect the same kind of systems and controls in both small and large firms. The important point is that a firm's systems and controls should be fit for purpose given the size and the business of the firm. In the case of a sole trader, one person is responsible for all aspects of the firm, but we expect there to be adequate systems to allow that person to manage and monitor the firm.
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MIGI 3.2.6

handbook-guidance
The following chapters of this Guide are also relevant:
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MIGI 4

Authorisation

MIGI 4.1

Introduction

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MIGI 4.1.1

handbook-guidance
Firms that want authorisation to carry out regulated activities will need to:
(1) apply to us for permission to carry on one or more regulated activities; and
(2) seek our approval for any individuals within the firm that perform controlled functions to become approved persons (see Part I, Chapter 6).

MIGI 4.1.2

handbook-guidance
Our assessment at the authorisation stage aims to allow only those firms and individuals satisfying the necessary criteria (including honesty, competence and financial soundness) to engage in a regulated activity. These criteria are called the threshold conditions.
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MIGI 4.1.3

handbook-guidance
The Authorisation manual (AUTH) sets out the background to the authorisation and approval processes and provides guidance on how we authorise firms. This chapter explains in general terms what we will consider in deciding whether to authorise a firm.
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MIGI 4.1.4

handbook-guidance
If your firm wishes to apply for authorisation, you can find application packs at: www.fsa.gov.uk/pages/Library/Communication/Forms/sfpack.shtml.

MIGI 4.2

The authorisation process

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MIGI 4.2.1

handbook-guidance
What is the FSA's approach to the authorisation and approval process?

How do you determine whether your firm requires permission?

MIGI 4.2.2

handbook-guidance
Before applying for authorisation you should decide whether your firm will carry on regulated activities for which it requires permission. If your firm will carry on regulated activities and you wish to seek authorisation your firm's application will need to specify the regulated activities you are applying for permission to carry on. The table below sets out the regulated activities that relate to mortgage and insurance mediation activities:
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MIGI 4.2.3

handbook-guidance
Regulated activities - mortgage and insurance mediation activities:

MIGI 4.2.4

handbook-guidance
We have produced guidance to help firms decide whether or not they need to be authorised and, if so, what regulated activities they need to apply for permission to carry on.
(1) AUTH App 4: 'Guidance on regulated activities connected with mortgages' (the 'Mortgage Perimeter Guidance').
(2) AUTH App 5: 'Guidance on Insurance Mediation Activities' (the 'Insurance Mediation Perimeter Guidance').
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The threshold conditions

MIGI 4.2.5

handbook-guidance
Before granting a permission for a firm to carry on regulated activities we must be satisfied that the firm meets (and will continue to meet) a set of criteria known as the threshold conditions. The threshold conditions are set out in Schedule 6 of the FSMA, and there is guidance on them in the Threshold Conditions sourcebook (COND). The threshold conditions that are relevant to mortgage and insurance intermediaries are in the table below. If your firm submits an application, you will need to provide us with certain information about your firm and the individuals who want to be approved persons so that we can assess whether your firm satisfies the threshold conditions.

MIGI 4.2.6

handbook-guidance
The threshold conditions:

MIGI 4.2.7

handbook-guidance
As part of the FSA's function of monitoring a firm's continuing satisfaction of the threshold conditions, we need to consider those persons closely linked with a firm. COND 2.3 explains what is meant by 'close links'. Similarly, the FSA needs to consider those persons who have control over firms. 'Controller' is defined in the Handbook Glossary. The FSA requires all firms, including sole traders, to submit certain information on their close links and individual controllers on the relevant Small Firms Controllers forms when they apply for authorisation. Questions on close links are included in the body of the main application form. The form to be completed for each Controller is explained and available on the FSA website at: www.fsa.gov.uk/pages/Library/Communication/Forms/sfpack.shtml. In addition, once they are authorised, all firms need to notify us of changes in the close links and the controllers of the firm, as well as of existing controllers of the firm changing their level of control through specified thresholds. Details of the change of control and close links requirements are in SUP 11. Further information about the notification requirements that apply to your firm is in Part I, Chapter 11.2.

MIGI 4.2.8

handbook-guidance
Your firm is responsible for ensuring that it continues to meet the threshold conditions in order to keep its authorisation and scope of permission.
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What is meant by 'scope of permission'?

MIGI 4.2.9

handbook-guidance
Following a successful application, we will grant a firm permission (see AUTH 3.3 ). The scope of your firm's permission will be set out in a Scope of Permission Notice. This will define the scope in terms of regulated activities together with any limitations and any other requirements or restrictions that may be applied. Limitations are explained in AUTH 3.6, requirements in AUTH 3.7. An example of a limitation is where a limit is placed on the number of clients a firm can deal with during an initial period until its systems are proven. An example of a requirement is the requirement that a firm does not hold client money.

MIGI 4.2.10

handbook-guidance
Your firm is responsible for ensuring that it continues to hold the correct permission that includes the regulated activities it wishes to carry out.
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The FSA Register

MIGI 4.2.11

handbook-guidance
We maintain a public register (the FSA Register) which lists, amongst others, all FSA authorised firms, appointed representatives and approved persons. Firms and consumers may access the FSA Register to check your firm's permission, for example. When we grant an application for authorisation, we update the FSA Register with the activities the firm has permission to carry on. You can access the FSA Register at http://www.fsa.gov.uk/Pages/register/.

Which parts of the Handbook apply?

MIGI 4.2.12

handbook-guidance
Both AUTH and the Supervision manual (SUP) are relevant. AUTH contains:
(1) an overview of the manual (AUTH 1);
(2) the Mortgage Perimeter Guidance (AUTH App 4) and the Insurance Mediation Perimeter Guidance (AUTH App 5); and
(3) an explanation of the authorisation process and the permission regime (AUTH 3).
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MIGI 4.2.13

handbook-guidance
After a permission has been granted, a firm can apply to vary or cancel that permission, including any limitation or requirement, at any time. The procedures that need to be followed are set out in full in SUP 6 and are summarised in Part I, Chapter 16 of this Guide.
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Where can you find further information?

MIGI 4.2.14

handbook-guidance
You can find factsheets that give further details on authorisation requirements for both mortgage and insurance intermediaries at www.fsa.gov.uk/Pages/Doing/Info/MGI/Factsheets/index.shtml.

MIGI 4.2.15

handbook-guidance
Authorisation application packs are available to view online at www.fsa.gov.uk/pages/Library/Communication/Forms/sfpack.shtml, where you can also register to receive an application pack for your firm. Alternatively you can order a copy of an application pack by telephoning 020 7066 3954.

MIGI 4.2.16

handbook-guidance
The following chapters of this Guide are also relevant:
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Export chapter as

MIGI 5

Disclosure of your Firm's Statutory Status

MIGI 5.1

Introduction

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MIGI 5.1.1

handbook-guidance
You need to disclose certain information about your firm when you conduct mortgage or insurance mediation activity with or for customers. This is in line with Principle 7 (Communications with clients) (see Part I, Chapter 3), which requires you to pay due regard to the information needs of your clients and communicate information to them in a way that is clear, fair and not misleading.

MIGI 5.1.2

handbook-guidance
This chapter covers the requirement in GEN 4 (see General Provisions (GEN)) that all authorised firms disclose their 'statutory status' in every letter (or electronic equivalent) sent to private customers. In addition, there are also specific requirements in MCOB (see Part II, Chapter 2.2) and ICOB (see Part III, Chapter 3.3) relating to what information mortgage and insurance intermediaries, respectively, have to disclose.

MIGI 5.2

Statutory status disclosure

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MIGI 5.2.1

handbook-guidance
Our rules require firms to provide appropriate and adequate information about the identity of the firm's regulator, i.e. the FSA. The requirements regarding statutory status are in GEN 4.3 and GEN 4 Annex 1. These can be summarised as follows:
(1) Authorised firms must take reasonable care to ensure that every letter (or electronic equivalent) which it or its employees send to a private customer, with a view to or in connection with the firm carrying on a regulated activity, discloses that the firm is "Authorised and regulated by the Financial Services Authority".
(2) Appointed representatives are required to disclose that "[name of Appointed Representative] is an appointed representative of [Firm] which is authorised and regulated by the Financial Services Authority".
(3) You should not abbreviate the Financial Services Authority to FSA in this context.
(4) You are likely to find it convenient to include the required disclosure on your firm's letterhead.
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MIGI 5.2.2

handbook-guidance
To allow mortgage and insurance intermediaries who are not currently authorised time to make the necessary changes to their stationery, we have introduced a transitional provision which means that firms do not have to amend their stationery to include disclosure of their statutory status until 15 July 2005.

Changes to disclosure requirements when your firm carries on insurance mediation activities or regulated mortgage activities for another authorised firm or an AR

MIGI 5.2.3

handbook-guidance
A waiver and modification by consent has been in force for firms (third party processors) who undertake regulated activities on behalf of another authorised firm. This waiver and modification affected MCOB 1.2.1 R, ICOB 1.2.1 R and GEN 4.3.1 R. This has now been replaced by permanent rule amendments, which came into force on 1 June 2005. See the Third Party Processors Instrument 2005 - 2005/25 -www.fsahandbook.info/FSA/handbook/LI/2005/2005_25.pdf

MIGI 5.2.4

handbook-guidance
The rule amendments allow a third party processor (Firm A) undertaking regulated mortgage activities or insurance mediation activities (in relation to non-investment insurance contracts) on behalf of another authorised firm (Firm B) under an outsourcing contract to disclose to customers that it is B where our rules would otherwise require A to disclose its real identity. The outsourcing agreement between the two firms must acknowledge that the firm outsourcing the activities (Firm B) accepts responsibility for the activities carried on by the other firm (Firm A) on its behalf.
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MIGI 5.2.5

handbook-guidance
The rules also cater for cases where an AR acts as third party processor for its principal, or where an authorised firm acts as third party processor for an AR.
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MIGI 5.2.6

handbook-guidance
The following chapters of this Guide are also relevant:
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Export chapter as

MIGI 6

Approved Persons

MIGI 6.1

Introduction

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MIGI 6.1.1

handbook-guidance
An individual within a firm or an appointed representative of that firm that will perform a 'controlled function' in the firm or appointed representative must first be approved by us as fit and proper to carry out that function. Direct regulation of these individuals complements our regulation of the authorised firm itself.

MIGI 6.1.2

handbook-guidance
Broadly, a person is likely to be performing a controlled function in a mortgage or insurance intermediary if he holds a position of significant influence in the firm. If your firm is small and has a simple organisational structure, it is likely that only those on the firm's governing body will need to be approved persons.
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MIGI 6.1.3

handbook-guidance
This chapter:
(1) helps you determine which individuals in your firm need to be approved persons (whether your firm is authorised or an appointed representative);
(2) explains what you need to do if these individuals are to be approved; and
(3) explains that there are continuing obligations on approved persons once they have been approved.
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MIGI 6.2

The approved persons requirements

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What are the controlled functions?

MIGI 6.2.1

handbook-guidance
The controlled functions are divided into 'customer functions' and 'significant influence functions'. Only the significant influence functions apply to insurance and mortgage intermediaries, so the customer functions are not covered in this Guide. There is a full list of the controlled functions in SUP 10.4.5 R to which you should refer to help you decide which controlled functions are relevant to your firm.
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What are the significant influence functions?

MIGI 6.2.2

handbook-guidance
The significant influence functions are performed by individuals who exercise a significant influence over the conduct of a firm's affairs, such as a director or partner. You need to be an approved person to perform a significant influence function. The significant influence functions are divided into four types:
(1) governing functions (SUP 10.6);
(2) required functions (SUP 10.7);
(3) systems and controls functions (SUP 10.8); and
(4) significant management functions (SUP 10.9).

How does the approved persons regime apply to sole traders?

MIGI 6.2.3

handbook-guidance
If you are a sole trader you will only need to be an approved person yourself if you employ other approved persons. The employees of a sole trader carrying on insurance or mortgage mediation activities will generally not be performing controlled functions. So, if you are a sole trader you are unlikely to need any approved persons (but see also paragraph 6.2.11 below). For further details see SUP 10.6.30 R to SUP 10.6.32 G.

Which controlled functions are relevant to small intermediaries?

MIGI 6.2.4

handbook-guidance
As noted above, only the significant influence functions apply to insurance and mortgage intermediaries. Only the governing functions and the required functions are likely to be relevant to small mortgage and insurance intermediaries with simple organisational structures (but see paragraphs 6.2.7 to 6.2.9 of this Chapter).
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MIGI 6.2.5

handbook-guidance
Fewer controlled functions apply to firms that are 'secondary insurance intermediaries' than to 'primary insurance intermediaries'. A primary insurance intermediary is one whose main business is insurance mediation activities. A secondary intermediary is one whose main business is not insurance mediation activities and who does not carry on any regulated activities other than insurance mediation activities, for example a motor dealer that also sells car insurance.
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MIGI 6.2.6

handbook-guidance
The controlled functions that are likely to apply to mortgage and insurance intermediaries:
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Might other controlled functions also apply to a mortgage or insurance intermediary?

MIGI 6.2.7

handbook-guidance
Although in most cases only the controlled functions in the above table will be relevant to a small mortgage or insurance intermediary, other controlled functions could, in certain circumstances, also apply.
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MIGI 6.2.8

handbook-guidance
For example, in more complex firms, if significant managerial responsibilities are delegated to non-executive directors or individuals who are not on the firm's governing body (see SUP 10.6.2 R and SUP 10.6.3 G), these individuals must get approval from us if they are to perform:
(1) systems and controls functions (see SUP 10.8 and SYSC 3.2); or
(2) significant management functions (see SUP 10.9 and SYSC 2.1).
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MIGI 6.2.9

handbook-guidance
If you are approved to perform a governing function, for example as a director, you will not require separate approval to perform the systems and controls and significant management functions.
  • 01/12/2004

Responsibility for insurance mediation

MIGI 6.2.10

handbook-guidance
An insurance intermediary (other than a sole trader) must make a director or senior manager responsible for the firm's insurance mediation activities. Typically, responsibility should be given to a person approved to perform a governing function. Where insurance mediation is not your main business activity, responsibility for insurance mediation should be allocated to the approved person performing the apportionment and oversight function (CF8). In the case of a sole trader, the sole trader him or herself will be responsible for the firm's insurance mediation activity, regardless of whether or not he or she is an approved person. The FSA Register will identify the person who has this responsibility. You should refer to PRU 9.1 for further details.
  • 01/12/2004

Examples - controlled functions and firm types

MIGI 6.2.11

handbook-guidance
Examples to help you identify which controlled functions are likely to apply to your firm:

MIGI 6.3

Approved persons requirements for appointed representatives

  • 01/12/2004

MIGI 6.3.1

handbook-guidance
Appointed representatives (ARs) are also required to have approved persons, though the requirements are different for appointed representatives than for authorised firms and are explained below. Part I, Chapter 9 covers the general requirements for mortgage and insurance intermediaries with ARs.
  • 01/12/2004

MIGI 6.3.2

handbook-guidance
The approved persons requirements are different for different types of ARs.
(1)
All individuals that perform the governing functions within:•ARs carrying on mortgage mediation activities; and •ARs carrying on insurance mediation activities as their main business;


will need to be approved persons.
(2) Like secondary insurance intermediaries, 'secondary insurance mediation ARs' require only one approved persons, who will need to apply for and obtain approval to perform the governing functions. A 'secondary insurance mediation AR' is one whose main business is not insurance mediation and who is limited by its principal to carrying on only insurance mediation activities and no other regulated activities.
(3) Introducer ARs are not required to have any approved persons (see Part I, paragraph 9.2.2 for an explanation of introducer ARs).

MIGI 6.3.3

handbook-guidance
Examples to help you identify which controlled functions are likely to apply to your firm's ARs:
  • 01/12/2004

MIGI 6.3.4

handbook-guidance
Where an AR is undertaking insurance mediation activities (including 'introducing') the Principal is required to notify us of a contact name for the AR, which will then be shown on the FSA Register. The Principal designates a person 'Responsible for its Insurance Mediation business' (RIM) under PRU 9.1 who will also be responsible for the insurance mediation activities of the AR (PRU 9.1.6 G). The AR's contact person will be able to direct a customer to the RIM, if necessary. This is explained in Part I, Chapter 9, paragraph 9.2.18.
  • 31/05/2005

MIGI 6.4

Becoming an approved person

  • 01/12/2004

What is the test for approval to become an approved person?

MIGI 6.4.1

handbook-guidance
We will only approve an individual to perform a controlled function if we are satisfied that person is a fit and proper person to perform that controlled function. We will look at a number of factors including an individual's honesty, integrity, reputation, competence, capability, and financial standing. Further details can be found in The Fit and Proper Person test for Approved Persons ( FIT).
  • 01/12/2004

Applying to become an approved person

MIGI 6.4.2

handbook-guidance
Who should make the application?

Your firm is required to ensure that no-one performs a controlled function until we have granted approval. Applications must be submitted by, or on behalf of, the firm itself, not by the individual who wishes to become an approved person. The principal firm of an AR is responsible for submitting applications for the approval of anyone in the AR who is required to be an approved person.
  • 01/12/2004

MIGI 6.4.3

handbook-guidance
When should your firm apply?
(1) Your firm will not be authorised until individual candidates have been approved to perform the relevant controlled functions.
(2) You will need to obtain our approval before anyone joining your firm can perform a controlled function, even if they were approved elsewhere. In most circumstances, you will also need our approval before an approved person moves from one controlled function to another within your firm. If an approved person ceases to perform a controlled function for your firm, you must notify us. Further details can be found in SUP 10.
  • 01/12/2004

MIGI 6.4.4

handbook-guidance
Where can you find the relevant form?

Your firm should apply using Approved Persons Form A, which is available at www.fsa.gov.uk/pages/Library/Communication/Forms/approved.shtml.

MIGI 6.4.5

handbook-guidance
How long will an application take?

We must respond to approved persons applications within three months. In practice, the majority of applications are processed much sooner than this.
  • 01/12/2004

MIGI 6.4.6

handbook-guidance
What notifications do you need to submit after approval?

You must notify us of changes to an approved person i.e.: All of these forms are available at:www.fsa.gov.uk/pages/Library/Communication/Forms/approved.shtml
  • 31/05/2005

MIGI 6.4.7

handbook-guidance
Can I submit the forms electronically?

Yes, you can do this through our Firms Online service. First, you must ensure your firm is registered to use this service, details of which are available at: www.fsa.gov.uk/pages/Doing/Regulated/Firms/
  • 31/05/2005

MIGI 6.5

Principles and Code of Practice for approved persons

  • 01/12/2004

MIGI 6.5.1

handbook-guidance
An approved person must remain fit and proper and comply with the Statements of Principle and Code of Practice for Approved Persons (APER). The Statements of Principle for Approved Persons (APER 2) require, for example, that an approved person must act with due skill, care and diligence in performing its controlled function. The Code of Practice (APER 3 and APER 4) provides guidance on the factors which in our opinion should be taken into account when assessing whether an approved person has complied with the Statements of Principle. There are further details in APER.

MIGI 6.5.2

handbook-guidance
The following chapters of this Guide are also relevant:
  • 01/12/2004

Export chapter as

MIGI 7

Financial resources requirements

MIGI 7.1

Introduction

  • 01/12/2004

MIGI 7.1.1

handbook-guidance
Mortgage and insurance intermediaries are required by our rules:
(1) to hold a minimum amount of capital (capital resources requirement); and
(2) to ensure that they are able to meet their liabilities as they fall due (solvency requirement).
  • 01/12/2004

MIGI 7.1.2

handbook-guidance
This chapter summarises these requirements, which are in PRU 9.3 (see the Integrated Prudential Sourcebook (PRU)).
  • 01/12/2004

MIGI 7.1.3

handbook-guidance
By setting minimum financial resources standards, we aim to reduce the possibility of a shortfall of funds and to provide a cushion against disruption if the firm ceases to trade. There is a greater risk to consumers, and a greater adverse impact on market confidence, if a firm holds client money or client title documents (such as bearer instruments) and fails. For this reason, the capital resources requirements distinguish between mortgage and insurance intermediaries holding client money or title documents and those that do not.
  • 01/12/2004

MIGI 7.1.4

handbook-guidance
The financial resources requirements are minimum requirements. In line with FSA Principles 3 and 4 (see the table at Part I, paragraph 3.1.3), your firm's senior management is responsible for maintaining adequate financial resources at all times. So, the onus is on senior management to ensure that your firm has such additional financial resources over and above our requirements as they consider necessary.
  • 01/12/2004

MIGI 7.2

The capital resources requirements

  • 01/12/2004

What are the capital resources requirements?

MIGI 7.2.1

handbook-guidance
The capital resources requirements are the same for mortgage and insurance intermediaries. They are set out in PRU 9.3.
  • 01/12/2004

MIGI 7.2.2

handbook-guidance
The table below summarises the capital resources requirements. Generally, the larger your annual income from regulated activities (i.e. insurance mediation activities, mortgage mediation activities, or both) the more capital you have to hold.
  • 01/12/2004

MIGI 7.2.3

handbook-guidance
Firms that hold client money or client title documents are required to hold more capital than those that do not. In addition, higher minimum resources requirements apply to insurance intermediaries that hold client money relating to retail customers in a non-statutory trust. There is more information on the rules that apply to insurance intermediaries when handling client money in Part III, Chapter 2 (statutory and non-statutory trusts are explained at paragraphs 2.3.2 to 2.3.9).

MIGI 7.2.4

handbook-guidance
There are no specific rules governing how mortgage intermediaries must handle client money but they must comply with the FSA's overarching Principles (see Part I, Chapter 3) and other generally applicable rules.
  • 01/12/2004

MIGI 7.2.5

handbook-guidance
Summary of the capital resources requirements (in PRU 9.3.30 R) for a firm carrying on mortgage mediation activities, insurance mediation activities, or both:

What counts towards your firm's annual income?

MIGI 7.2.6

handbook-guidance
When calculating your firm's capital resources requirement (see the table at paragraph 7.2.5 above), the only income that counts towards its annual income is that from its insurance mediation activities, mortgage mediation activities, or both, according to your most recent annual financial statement. You should not include income from any other sources in the calculation. So, for example, a motor dealer that is authorised to carry on insurance mediation activities would not need to include its income from selling cars, only its income from selling insurance.

MIGI 7.2.7

handbook-guidance
Annual income includes all brokerages, fees, commissions or other related income earned by your firm. It includes commissions and other earnings which your firm pays out of its own income to other persons involved in a transaction (e.g. commission shared with a sub-agent or another intermediary). Your firm's income does not, however, include any amounts due to another person (e.g. the product provider), which you have collected on its behalf. If your firm has appointed representatives you should include in your income calculation the share of your income that you have paid out to them or that they have retained for their activities for which you have accepted responsibility as principal.

MIGI 7.2.8

handbook-guidance
Any commission income your firm receives from a third party premium finance firm need not be included in your capital resources requirement calculation.
  • 01/12/2004

MIGI 7.2.9

handbook-guidance
For full details of what we mean by annual income, see PRU 9.3.42 R to PRU 9.3.50 R.
  • 01/12/2004

What counts towards your firm's capital resources?

MIGI 7.2.10

handbook-guidance
PRU 9.3.51 R to PRU 9.3.57 R sets out what you can include when calculating your firm's capital resources. This differs depending on whether your firm is a company, a sole trader, a partnership or a limited liability partnership.
  • 01/12/2004

MIGI 7.2.11

handbook-guidance
Companies

If your firm is a UK-incorporated company, the items eligible for inclusion in its capital resources are:
(1) fully paid up ordinary shares in the company;
(2) preference shares in the company;
(3) audited reserves (i.e. retained earnings, as verified by your firm's auditors);
(4) interim net profits (i.e. profits made after the date of your firm's last annual financial statement, as verified by your firm's auditors);
(5) revaluation reserves (i.e. reserves for any reassessment of the value of your firm's capital assets compared to their original cost);
(6) general provisions (i.e. provisions held against unidentified potential losses - though we would not normally expect a mortgage or insurance intermediary to have any); and
(7) subordinated loans (i.e. loans that rank below other, unsubordinated, debt in the queue for repayment if the borrower has to be wound up. Subordinated loans can only be counted as part of your firm's capital if they satisfy the conditions in PRU 9.3.56 R-57.

MIGI 7.2.12

handbook-guidance
Sole traders

If your firm is a sole trader, your capital resources are the net balances (according to the sole trader's most recent annual financial statement) on your capital account and current account, plus any eligible subordinated loans.
  • 01/12/2004

MIGI 7.2.13

handbook-guidance
Partnerships

If your firm is a partnership, your capital resources will normally consist of the net balances, (according to the partnership's most recent annual financial statement), on:
(1) the partners' capital account (i.e. the account into which the partners' capital contributions are paid); and
(2) the partners' current accounts;
plus any eligible subordinated loans.
  • 01/12/2004

MIGI 7.2.14

handbook-guidance
Limited liability partnerships

If your firm is a limited liability partnership (LLP), your capital resources will normally consist of the net balances (according to the LLP's most recent annual financial statement) on the members' capital account and the members' reserves, plus any eligible subordinated loans.
  • 01/12/2004

MIGI 7.2.15

handbook-guidance
Subordinated loans and redeemable preference shares

There is a limit on the amount of subordinated loans and redeemable preference shares that your firm may include in its capital resources if it holds client money or client title documents. For details of this restriction, see PRU 9.3.57 R.
  • 01/12/2004

Deductions from capital resources

MIGI 7.2.16

handbook-guidance
To work out how much capital your firm has you must deduct the following items from the total of the above capital resources items:
(1) intangible assets (e.g. brand names, trademarks and, from 14 January 2008, goodwill);
(2) interim net losses (i.e. losses made after the date of your firm's last annual financial statement);
(3) investments in your own shares (if your firm is a company); and
(4) excess of drawings over profits (if your firm is a sole trader or partnership).
  • 01/12/2004

What if my firm has a capital resources or solvency shortfall?

MIGI 7.2.17

handbook-guidance
If, after making the deductions set out above, your firm has a shortfall in meeting either its solvency or its capital resources requirement, there may be other options open to it to make good the shortfall (PRU 9.3.54 R) as shown in the table at paragraph 7.2.18.
  • 01/12/2004

MIGI 7.2.18

handbook-guidance
Options available to your firm if it has a shortfall:
  • 01/12/2004

MIGI 7.2.19

handbook-guidance
The following chapters of this Guide are also relevant:
  • 01/12/2004

MIGI 7.3

Summary flowchart and worked examples

  • 01/12/2004

Summary flowchart: does your firm meet its capital resources requirement?

MIGI 7.3.1

handbook-guidance
The flowchart below takes you through the questions you need to consider to work out whether or not your firm meets its capital resources requirement. In addition, on the next few pages you will find some worked examples to help you.
  • 01/12/2004

MIGI 7.3.2

handbook-guidance
Does your firm meet its capital resources requirement?
  • 01/12/2004

Financial resources requirements: worked examples

MIGI 7.3.3

handbook-guidance
Example 1: Limited company not holding client money or client title documents


Company A has annual mortgage mediation income of £20,000, according to its last financial statements. Company A does not hold client money.

Company A's capital resources requirement is the higher of £5,000 and 2.5% of its annual mortgage mediation income, i.e. the higher of:

• £5,000; and

• 2.5% of £20,000 = £500

So company A must have capital resources of at least £5,000. Company A's capital resources = share capital + audited reserves + subordinated loan = £1,000 + £10,000 + £5,000 = £16,000.

So Company A meets its capital resources requirement.

Note: from 14 January 2008, Company A must deduct the goodwill on its balance sheet, so from that date, its capital resources will be £14,000, based on this balance sheet and assuming that the subordinated loan has not matured.
  • 01/12/2004

MIGI 7.3.4

handbook-guidance
Example 2: Partnership holding client money


Partnership B, which holds client money in a statutory trust, has annual insurance mediation income of £210,000, according to its last annual financial statement.

Partnership B's capital resources requirement is the higher of £10,000 and 5% of its annual insurance mediation income, i.e. the higher of:

•£10,000; and

• 5% of £210,000 = £10,500.

So Partnership B must have capital resources of at least £10,500.

Partnership B's capital resources = current account + capital account

= £20,000 + £1,000 = £21,000.

So Partnership B meets its capital resources requirement.
  • 01/12/2004

MIGI 7.3.5

handbook-guidance
Example 3: Sole trader not holding client money or other client title documents


Sole trader C has annual mortgage mediation income of £40,000, according to its last financial statements. Sole trader C does not hold client money. In addition, Sole Trader C has personal assets of £30,000 and personal liabilities of £1,000.

Sole trader C's capital resources requirement is the higher of £5,000 and 2.5% of its annual mortgage mediation income, i.e. the higher of:

•£5,000; and

• 2.5% of £40,000 = £1,000.

So Sole Trader C must have capital resources of at least £5,000.

Sole trader C's capital resources = capital account + current account =

£1,000 + £1,000 = £2,000.

So Sole Trader C has a shortfall of £3,000 in meeting its capital resources requirement.

However, Sole Trader C has net personal assets of £29,000, so £3,000 of these may be used to make up this £2,000 shortfall.
  • 01/12/2004

Export chapter as

MIGI 8

Professional indemnity insurance ('PII')

MIGI 8.1

Introduction

  • 01/12/2004

MIGI 8.1.1

handbook-guidance
PII helps to ensure that a firm has the resources to meet valid claims from customers and others even when the firm could not afford to do so out of its own resources. For example, a firm may agree to advise a customer but do so in a way that results in the customer acquiring a financial product that is not suitable. Most authorised insurance and mortgage intermediaries are required to maintain PII cover that satisfies the requirements in PRU 9.2. If you do not have compliant PII cover you risk breaching these rules and threshold condition 4, which is the requirement to maintain adequate resources.
  • 01/12/2004

MIGI 8.1.2

handbook-guidance
This chapter explains:
(1) which mortgage and insurance intermediaries need to hold PII;
(2) the level of cover a PII policy must provide;
(3) the level of excess a PII policy must have; and
(4) the risks a PII policy must cover.
There are some worked examples at the end of this Chapter to help you calculate what level of cover and what level of excess your firm's PII policy is required to have.
  • 01/12/2004

MIGI 8.1.3

handbook-guidance
The PII requirements for mortgage intermediaries and insurance intermediaries are different. If your firm carries on both regulated activities then it will not need to comply with both of these requirements, instead it must have a PII policy which meets the higher of the two requirements, which in most cases will be the requirement for insurance intermediaries.

MIGI 8.1.4

handbook-guidance
The requirements are minimum requirements. In line with Principles 3 and 4 (see the table at Part I, paragraph 3.1.3), your firm's senior management is responsible for maintaining adequate financial resources at all times. So, the onus will be on your senior management to ensure that the firm has such additional financial resources over and above our requirements as they consider are necessary.
  • 01/12/2004

MIGI 8.2

The requirement to hold PII

  • 01/12/2004

Which mortgage and insurance intermediaries need to hold PII?

MIGI 8.2.1

handbook-guidance
Mortgage intermediaries must hold PII cover unless:
(1) the intermediary has net tangible assets of more than £1 million; or
(2) the intermediary has a 'comparable guarantee' from an authorised person with net tangible assets of £1 million.

MIGI 8.2.2

handbook-guidance
Insurance intermediaries must hold PII cover unless the intermediary has a 'comparable guarantee' from an authorised person with net tangible assets of £10 million.

MIGI 8.2.3

handbook-guidance
Broadly, a 'comparable guarantee' is an agreement by the guarantor to cover any claims that would be covered by a PII policy that satisfies our rules. You should be aware that, if your firm is a member of a group of companies that contains an authorised person, any comparable guarantee must come from that firm. For full details about whether your firm does or does not need to hold PII see PRU 9.2.1 R.

MIGI 8.3

What must your firm's PII policy cover?

  • 01/12/2004

Mortgage mediation: what minimum level of cover must your firm's policy provide?

MIGI 8.3.1

handbook-guidance
Our rules require a firm's PII policy to provide specified minimum levels of cover. In relation to the firm's mortgage mediation activities, the minimum level is either:
(1) cover per claim equal to £100,000 or, if higher, 10% of annual income; or
(2) aggregate cover equal to £500,000 or, if higher, 10% of annual income;
in each case subject to an upper limit of £1m cover.
  • 01/12/2004

Insurance mediation: what minimum level of cover must your firm's policy provide?

MIGI 8.3.2

handbook-guidance
In relation to the firm's insurance mediation activities, the policy must provide cover of at least €1m per claim. In addition, the policy must provide a minimum aggregate level of cover of €1.5m or, if higher, 10% of annual income, subject to an upper limit of £30m cover.

MIGI 8.3.3

handbook-guidance
Insurance intermediaries that hold a policy denominated in sterling will satisfy these limits if they are at least equivalent to our euro requirements based on the exchange rate when the policy is agreed. We do not expect firms to build in a margin or adjust cover in response to exchange rate movements throughout the duration of the policy. Further information about the minimum levels of cover are in PRU 9.2.13 R to PRU 9.2.15 R.
  • 01/12/2004

What counts towards your firm's annual income?

MIGI 8.3.4

handbook-guidance
Your firm must calculate the minimum levels of cover required of its PII policy. For this, the only income that counts towards your firm's annual income is that from its insurance mediation activities, mortgage mediation activities, or both, according to its most recent annual financial statement. Income from any other source should not be included in the calculation. So, for example, a motor dealer that is authorised to carry on insurance mediation activities would not need to include its income from selling cars, only its income from selling insurance.
  • 01/12/2004

MIGI 8.3.5

handbook-guidance
Annual income includes all brokerages, fees, commissions or other related income earned by your firm. It includes commissions and other earnings which your firm pays out of its own income to other persons involved in a transaction (e.g. commission shared with a sub-agent or another intermediary).. Your firm's income does not, however, include any amounts due to another person (e.g. the product provider), which you have collected on its behalf. If your firm has appointed representatives you should include in your income calculation the share of your income that you have paid out to them or that they have retained for their activities for which you have accepted responsibility as principal.

MIGI 8.3.6

handbook-guidance
Any commission income your firm receives from a third party premium finance firm need not be included in the calculation of your firm's minimum levels of cover.
  • 01/12/2004

MIGI 8.3.7

handbook-guidance
For full details of what we mean by annual income, see PRU 9.3.42 R to PRU 9.3.50 R.
  • 01/12/2004

What level of excess should your firm's PII policy have?

MIGI 8.3.8

handbook-guidance
Our rules also specify the maximum levels of excess on a firm's PII policy (although, as explained below, if the firm holds additional capital it may increase the level of excess). The excess limits are the same for policies covering mortgage mediation activities and insurance mediation activities. However, firms that hold client money or client title documents (such as bearer instruments) are permitted a higher maximum excess than those that do not (because they will be required by our rules to hold more capital). The details are set out in the table below. More information on the rules that apply to insurance intermediaries when handling client money are in Part III, Chapter 2. There are no specific rules governing how mortgage intermediaries must handle client money, but they must comply with our overarching Principles (see Part I, Chapter 3) and other generally applicable rules.

MIGI 8.3.9

handbook-guidance
Maximum permitted excess for different types of firm:
  • 01/12/2004

MIGI 8.3.10

handbook-guidance
A firm can hold an excess that is higher than the limits in the table above provided it holds more capital than the minimum required by our rules (see Part I, Chapter 7). So you can negotiate how much risk to transfer to an insurance company and how much to retain, but you will have to hold additional own funds in line with the tables in PRU 9.2.21 R and PRU 9.2.22 R.
  • 01/12/2004

What risks must a PII policy cover?

MIGI 8.3.11

handbook-guidance
Your firm's PII policy must provide cover for claims that relate to the firm's insurance mediation activities, mortgage mediation activities, or both. The policy should cover not only claims arising as a result of the conduct of the firm itself, but also that of its employees and appointed representatives. Employees include (but are not limited to) partners, directors, individuals that are self-employed or operating under a contract hire agreement and any other individual that is employed in connection with the business.
  • 01/12/2004

MIGI 8.3.12

handbook-guidance
PII is a valuable means of providing firms with additional resources if a justified claim is made against the firm. So it is essential that a PII policy covers the potential for negligent acts (for example, mis-selling) and the provision of inappropriate advice by all employees, appointed representatives, agents and indeed directors and partners of the firm. Additionally, our rules require cover for fraudulent acts by employees, agents and appointed representatives of the firm. This is often termed 'dishonesty cover'.

MIGI 8.3.13

handbook-guidance
Your firm must have cover for:
(1) awards determined by the Financial Ombudsman Service (FOS) (for more details about the FOS see Part I, Chapter 18.2); and
(2) legal defence costs.

MIGI 8.3.14

handbook-guidance
The required cover need not all be under the same PII policy. So legal defence costs, for example, could be covered either under your PII policy or under a separate insurance policy.

MIGI 8.3.15

handbook-guidance
Our rules specify that your firm's policy must cover all claims that relate to business carried out from the date the firm is authorised by the FSA.
  • 31/05/2005

MIGI 8.4

Obtaining PII cover

  • 01/12/2004

Who can you get PII cover from?

MIGI 8.4.1

handbook-guidance
Broadly, you can obtain a PII policy from:
(1) any insurance company authorised to underwrite professional indemnity insurance policies in the European Economic Area (EEA); or
(2) a non-EEA insurance company authorised in a Zone A country, the Channel Islands, Gibraltar, Bermuda or the Isle of Man.
(For further details see PRU 9.2.7 R and PRU 9.2.9 G. 'Zone A country' is defined in the Handbook Glossary.)
  • 01/12/2004

PII policies providing cover for more than one firm

MIGI 8.4.2

handbook-guidance
Our rules allow firms to benefit from a policy that covers more than one firm, provided that:
(1) the minimum levels of cover of the policy are calculated on the basis of the combined annual income of all the firms named on the policy; and
(2) each firm named on the policy has the benefit of the required minimum levels of cover.
  • 01/12/2004

MIGI 8.4.3

handbook-guidance
However, the maximum level of excess permitted must be calculated on the basis of the annual income of each firm individually, not the combined income of all the firms covered by the policy. So if the excess on the policy exceeds the maximum permitted for a firm named on the policy it will not meet our requirements. In such a case it may be open to a firm to satisfy the alternative requirement of holding additional capital as explained at paragraph 8.3.10 above. Example 2 below shows how to calculate the required minimum levels of cover and the maximum permitted level of excess for a PII policy that covers more than one firm.
  • 01/12/2004

MIGI 8.4.4

handbook-guidance
As well as these requirements, if you decide to participate in such an arrangement you should ensure that the PII policy meets your needs. This will include assessing that the combined levels of cover are appropriate. Also, you should ensure that you are a named party to the PII policy, to avoid any doubt about whether or not you are covered by the policy.
  • 01/12/2004

MIGI 8.4.5

handbook-guidance
The following chapters of this Guide are also relevant:

MIGI 8.5

PII requirements: worked examples

  • 01/12/2004

MIGI 8.5.1

handbook-guidance
Example 1: insurance intermediary that does not hold client money

An insurance intermediary that does not hold client money, with annual income of £50,000 receives a quote for a PII policy that has a general excess of £5,000.

Minimum level of cover: €1,000,000 for a single claim AND €1,500,000 for aggregate claims.

The policy contains the following limits: £725,000 for a single claim AND £1,250,000 for aggregate claims.

Assuming an exchange rate of 1.4 when the terms of the policy are agreed, these levels of cover would be sufficient as they convert to €1,015,000 for a single claim and €1,750,000 for aggregate claims.

Excess levels: The maximum permitted excess level is £2,500 (as this is higher than 1.5% of annual income), so the excess on the policy is too high and the policy would not meet our requirements. Using the table in PRU 9.2.21 R shows that the firm would need to hold additional capital of £5,000. The extract from the table below shows how this is calculated.
  • 01/12/2004

MIGI 8.5.2

handbook-guidance
Example 2: two insurance intermediaries that both hold client money

Two unconnected insurance intermediaries, who both hold client money, wish to be covered by the same policy. Firm A has annual income of £1,250,000 and Firm B has annual income of £14,750,000. The policy quote has a general excess of £50,000.

Minimum level of cover required: €1,000,000 for a single claim AND £1,600,000 for aggregate claims. (The policy must cover single claims for €1,000,000 and it must cover aggregate claims for 10% of combined annual income (i.e. £1.6m), as this is greater than €1,500,000 (approx £1,100,000).)

Excess levels: As the £50,000 excess level is less than 3% of the annual income of firm B, the excess is acceptable for firm B. For firm A, the maximum permitted excess level is £37,500 (3% of £1,250,000). So the excess on the policy is too high for firm A and the policy would not meet our requirements. Using the table in PRU 9.2.22 R shows that firm A would need to additional capital of £16,000. The extract from the table below shows how this is calculated.
  • 01/12/2004

MIGI 8.5.3

handbook-guidance
Example 3: a mortgage intermediary that does not hold client money

A mortgage intermediary, that does not handle client money, has annual income of £3,000,000, receives a quote for a PII policy that has a general excess of £2,500.

Minimum level of cover required: £300,000 for a single claim OR £500,000 for aggregate claims (The policy must either cover single claims for 10% of annual income (i.e. £300,000) as this is higher than £100,000 or it must cover aggregate claims for £500,000, as this is higher than 10% of annual income.)

Excess levels: As the £2,500 excess level is less than the maximum permitted (1.5% of £3 million), the firm would not need to hold additional capital.
  • 01/12/2004

Export chapter as

MIGI 9

Appointed representatives

MIGI 9.1

Introduction

  • 01/12/2004

MIGI 9.1.1

handbook-guidance

This Chapter provides a brief explanation of how appointed representatives (ARs) carrying on mortgage mediation activities, insurance mediation activities, or both, are regulated. It will be helpful to firms that are, or are considering becoming, ARs. Such firms may also find it useful to read the factsheet Becoming an appointed representative www.fsa.gov.uk/pages/Doing/Info/MGI/Factsheets/fsa_5_appoint_p71.pdf . Most of the relevant rules are in SUP 12.

MIGI 9.2

Appointed representatives

  • 01/12/2004

What is an appointed representative?

MIGI 9.2.1

handbook-guidance
An AR is a person (this includes a firm) who carries on regulated activities and who, in doing so, acts under the responsibility of an authorised firm. There must be an express agreement to this effect and the authorised firm must accept responsibility in writing for what the AR does in the course of carrying on regulated activities. On this basis the AR does not need to be authorised by us. Our rules do not apply directly to an AR but everything the AR does (or omits to do) in carrying on the business for which the authorised firm has accepted responsibility is deemed to have been done (or omitted) by the authorised firm. An authorised firm must notify the FSA of the prescribed details about each of its ARs in order for the FSA to keep the Register up to date. Where an AR is undertaking insurance mediation activities the AR must be on the Register before they commence the business.

MIGI 9.2.2

handbook-guidance
If a person's insurance mediation activities are limited to introducing and distributing non-real time financial promotions (see Part II, Chapter 2.1 and Part III, Chapter 3.2 for more on financial promotions) two possibilities arise:
(1) Their activities may not amount to regulated activities or may be excluded. The circumstances where this may be the case are explained in detail in Section 5 of the Insurance Mediation Perimeter Guidance (see in particular AUTH App 5.6.5 G to AUTH App 5.6.9 G (Exclusion: article 72C (Provision of information on an incidental basis)) and AUTH App 5.6.17 G to AUTH App 5.6.21 G (Exclusion from article 25(2) for introducing)); or
(2) Where their activities do amount to regulated activities, they can become an Introducer Appointed Representative (IAR). For example, if a vet gives out information on pet insurance to customers and passes on the details of interested customers to an insurance intermediary, the intermediary could appoint the vet as its IAR.

MIGI 9.2.3

handbook-guidance
Introducing and distributing non-real time financial promotions relating to regulated mortgage contracts is unlikely to be a regulated activity (see AUTH App 4.5.10 G to AUTH App 4.5.18 G (Exclusion: article 25A(2) arrangements and introducing), so a firm will not need to become an IAR because it carries on these activities.

MIGI 9.2.4

handbook-guidance
An AR is not permitted to be authorised to conduct regulated activities and exempt from the need for authorisation at the same time. So, if your firm is already directly authorised by us, then it cannot become an AR unless it first cancels its permission.

What are a principal's responsibilities?

MIGI 9.2.5

handbook-guidance
A principal is an authorised firm that has a written contract with one or more ARs. A principal can be a product provider, intermediary or network. A principal can restrict its ARs completely, or in part, from acting on behalf of other principals.

MIGI 9.2.6

handbook-guidance
A principal is responsible for ensuring that the business of its ARs complies with the relevant regulatory requirements. At all times the principal must have adequate systems and controls to ensure that its ARs are fully compliant and that they are able to deliver the same level of protection to clients as if clients had dealt with the principal directly (SUP 12.1.3 G). A principal must make certain assessments (relating, for example, to the solvency and suitability of the AR) before it appoints an AR and on an ongoing basis (see SUP 12.4.2 R to SUP 12.4.5 G). Less strict requirements apply where a principal appoints an IAR (see SUP 12.4.6 R to SUP 12.4.8 G). Additional assessments are required where a principal appoints an AR to carry on insurance mediation activities (see SUP 12.4.8A R to SUP 12.4.10 G).

What regulated activities can an AR carry on?

MIGI 9.2.7

handbook-guidance
As an AR, your firm can only carry on regulated activities that fall within the scope of your principal's permissions. Moreover, there are additional limitations as to what regulated activities an AR can undertake as shown in the following table (see also SUP 12.4.1A G).

MIGI 9.2.8

handbook-guidance
Regulated activities an AR can carry on:

MIGI 9.2.9

handbook-guidance
An AR can provide a different service for different contracts, for instance it could advise on some products but simply arrange deals with regard to others.

MIGI 9.2.10

handbook-guidance
An AR must enter into a written contractual agreement with its principal. This should cover arrangements to enable both parties to fulfil their regulatory duties and any other commercial arrangements (see SUP 12.5.5 R). The precise terms of the commercial arrangements a principal makes with its ARs are a matter for agreement between them.

What if there is more than one principal?

MIGI 9.2.11

handbook-guidance
An AR may wish to have more than one principal. We impose limits on the number of principals an AR may have as shown in the table below (see also SUP 12.5.6A R to SUP 12.5.6B G).

MIGI 9.2.12

handbook-guidance
Limits on the number of principals an AR can have:

MIGI 9.2.13

handbook-guidance
If your firm agrees with its principal that it may act for other principals, all the principals must enter into a "multiple principal agreement" (SUP 12.4.5B R to SUP 12.4.5G). Your firm cannot act on behalf of another principal until this agreement is in place. The multiple principal agreement must set out the relationship between the principals of your firm and the agreement must address the matters set out at SUP 12.4.5C R. A multiple principal agreement is not required for IARs.

Can an AR hold client money?

MIGI 9.2.14

handbook-guidance
ARs are not restricted from holding client money that relates to their mortgage mediation activities. There are, however, rules governing the handling of client money by ARs carrying on insurance mediation activities (see the Client Assets Sourcebook (CASS), in particular CASS 5.2.3 R and CASS 5.2.6 G for the rules that relate to ARs holding money as agent and CASS 5.5.18 R to CASS 5.5.25 G for the rules that relate to ARs holding client money).

Does an AR need to have approved persons?

MIGI 9.2.15

handbook-guidance
ARs, other than IARs, will usually need to have approved persons. Details of these requirements are in Part I, Chapter 6, and in particular paragraphs 6.3.1 to 6.3.3. Any applications for Approved Persons for an AR must be submitted by the principal firm.

What notification requirements are required for ARs?

MIGI 9.2.16

handbook-guidance
We require principal firms to notify us when they enter into an AR agreement, terminate any AR agreement or when other changes occur to these agreements. These notifications must be submitted by the Principal using the forms available at www.fsa.gov.uk/pages/Library/Communication/Forms/spervision.shtml. The Principal can submit these forms electronically using the Firms Online service, details of which you can find at www.fsa.gov.uk/pages/Doing/Regulated/Firms/. Where an AR is undertaking insurance mediation activities (including 'introducing') the Principal is required to notify us of a contact name for the AR - this will then be shown on the FSA Register. The person the Principal designates as 'Responsible for its Insurance Mediation business' (RIM) under PRU 9.1 will also be responsible for the insurance mediation activities of the AR (PRU 9.1.6 G). The contact person of the AR will be able to direct a customer to the RIM, if necessary.

Statutory status disclosure

MIGI 9.2.17

handbook-guidance
Like authorised firms, ARs are required to disclose their statutory status in certain letters (and their electronic equivalent) with private customers. This is explained in Part I, Chapter 5.
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MIGI 9.2.18

handbook-guidance
The following chapters of this Guide are also relevant:
  • 31/05/2005

Export chapter as

MIGI 10

FSA supervision of small firms

MIGI 10.1

Introduction

  • 01/12/2004

MIGI 10.1.1

handbook-guidance
This chapter explains how we supervise small mortgage and insurance intermediaries.

MIGI 10.2

Framework

  • 01/12/2004

What is the FSA's approach?

MIGI 10.2.1

handbook-guidance
We first described our approach to regulation in A New Regulator for the New Millennium , which we published in January 2000. We have continued to explain our progress and any new developments in our approach to regulation in a number of subsequent progress reports.

MIGI 10.2.2

handbook-guidance
We have four statutory objectives which enable us to prioritise our efforts and focus on the most significant risks we face as a financial services regulator.
  • 01/12/2004

MIGI 10.2.3

handbook-guidance
The FSA's four statutory objectives are:
  • 01/12/2004

MIGI 10.2.4

handbook-guidance
In setting our regulatory priorities, we assess the risks posed to our objectives by the firms we regulate. We quantify the risks posed by individual firms, taking into account the effect of factors such as prevailing market risk, product risk, and most importantly, customer risk. All risks identified are measured in terms of their severity if they occur (their impact) and the probability of their occurrence. The outcomes of this process are used in deciding how to supervise each authorised firm.
  • 01/12/2004

How does the FSA monitor small firms?

MIGI 10.2.5

handbook-guidance
A small firm with a basic business model, a local retail client base, low turnover and no recent history of regulatory problems is likely to be 'low impact', and its regulatory relationship with us will reflect this. These firms do not have a dedicated FSA relationship manager but are able to deal with us, using a dedicated contact centre or via the internet.

MIGI 10.2.6

handbook-guidance
Certain communications with us can take place using a system called 'Firms Online'. Once you have registered for Firms Online (see www.fsa.gov.uk/pages/Doing/Regulated/Firms/), you can use it to:

Details of the Firms Online system are available at: www.fsa.gov.uk/pages/Doing/Regulated/Firms/.

MIGI 10.2.7

handbook-guidance
An important part of the supervision of low impact firms is the receipt and monitoring of data returns and other notifications. Firms are required to send us periodic regulatory information via the 'RMAR' (see Part I, Chapter 11). We use this information to assess firms' financial soundness and identify potential breaches of regulatory requirements. We are unlikely to carry out routine visits to low impact firms. Instead, we may make visits in response to risks identified from regulatory data or other information sources. In addition, the firm or its business may be included from time to time in our sector-wide projects (thematic work), which monitor general compliance standards and investigate cross-industry risks.

What is the FSA's supervision stategy for small firms?

MIGI 10.2.8

handbook-guidance
We have developed a supervision strategy for small firms which includes the elements above. Its primary focus is on mitigating the risk posed to our objectives by financial and compliance failures by a substantial number of low impact firms within a sector. Although individually small firms are low impact, collectively the impact of these firms may be much greater.

MIGI 10.2.9

handbook-guidance
The overall strategy includes:
(1) gathering information on all firms;
(2) focusing resources on thematic work and where appropriate reacting to any issues that arise;
(3) helping newly authorised firms to raise their own standards; and
(4) helping good firms to maintain standards.

MIGI 10.2.10

handbook-guidance
Where a firm is non-compliant, we will take enforcement action where we consider that is appropriate. Where firms show a lack of awareness of regulations we will try to help these firms to help themselves, for example, by providing regular guidance updates on our website and by means of a 'good practice guide'. We will also encourage these firms to increase their level of training and to make use of trade associations, product providers, auditors and consultants.

MIGI 10.2.11

handbook-guidance
Where a firm is compliant, we will try to help it maintain high standards. Such a firm provides a benchmark of good practice that can be spread more widely within the total population of firms.

MIGI 10.2.12

handbook-guidance
The following chapters of this Guide are also relevant:
  • 31/05/2005

Export chapter as

MIGI 11

Reporting and Notifications

MIGI 11.1

Reporting requirements

  • 01/12/2004

MIGI 11.1.1

handbook-guidance
We require insurance and mortgage intermediaries to report certain information to us on a regular basis. Our rules relating to reporting requirements are in SUP 16.

Why do we require periodic information from firms?

MIGI 11.1.2

handbook-guidance
We need to receive timely information from firms that carry on mortgage and insurance mediation activities so that we can effectively supervise them. The information we collect helps us to monitor firms' adherence to the threshold conditions (see Part I, paragraph 4.2.5) and specific rule requirements, and allows us to spot trends in individual firms and in the market as a whole. It also helps us to identify firms on which we should target supervisory attention.
  • 01/12/2004

How is information submitted?

MIGI 11.1.3

handbook-guidance
The reporting requirements for mortgage and insurance intermediaries are set out in the Retail Mediation Activities Return (RMAR), which firms must submit electronically via the internet, using our 'Firms Online' system (www.fsa.gov.uk/pages/doing/regulated/firms/index.shtml). The RMAR is 'tailored' for each individual firm in line with its regulated activities and other factors, such as legal status. This is to ensure that we only ask for information that is relevant to the supervision of each firm.

What information do you need to submit in the RMAR?

MIGI 11.1.4

handbook-guidance

When and how often do I have to submit the RMAR?

MIGI 11.1.5

handbook-guidance
The Handbook requirements relating to RMAR reporting come into force on 1 April 2005. So, firms need to ensure that they are collecting the necessary data from this date. Starting in July 2005, we will require the RMAR to be submitted twice each year within 30 business days of the end of the relevant reporting period. The reporting periods are:
(1) the six months immediately following a firm's accounting reference date; and
(2) the six months immediately preceding a firm's accounting reference date.
Larger firms, defined as those with annual income of more than £5m in the previous year, will be required to submit the financial information sections every three months.

MIGI 11.1.6

handbook-guidance
There is a transitional arrangement in place for smaller firms (defined as those with annual income of less than £60,000). For the first year this arrangement exempts these firms from the requirement to submit financial information at their financial year mid-point (making the financial reporting requirements annual rather than half yearly).
  • 01/12/2004

MIGI 11.1.7

handbook-guidance
Your firm's timetable for RMAR reporting will be set out within the Firms Online system, based on the data we hold on your firm. The tailored RMAR for your firm will automatically be available for you to complete at the end of each reporting period.

MIGI 11.1.8

handbook-guidance
The reporting requirements are in SUP 16.7.76 R to SUP 16.7.81 G. In SUP 16 Ann 18A, we list the data items within the RMAR and SUP 16 Ann 18BG contains guidance notes to help you complete it. Further help is available as part of the Firms Online system, and we will also make an online training course available on our website in due course.

MIGI 11.1.9

handbook-guidance
The transitional rules for reporting are in SUP TR 12BR to SUP TR 12FR.

Other requirements

MIGI 11.1.10

handbook-guidance
Your firm is also required to check each year, within 30 business days of its accounting reference date, that we have the correct 'standing data' for the firm (16.10.4R). A firm's standing data is the information in SUP 16 Annex 16 R and includes, for example, the name and registered office of the firm, the regulated activities for which the firm has permission, the name and address of the firm's auditor (if applicable) and its accounting reference date. Your firm should check its standing data through the Firms Online system (www.fsa.gov.uk/pages/doing/regulated/firms/index.shtml) - as explained in Part I, paragraph 10.2.6 - and notify us if any data is incorrect. This requirement is in addition to the notification requirements set out in Part I, paragraph 11.2 below.

MIGI 11.1.11

handbook-guidance
We also collect data (known as product sales data or 'PSD') on individual transactions in mortgages and pure protection products. However, this data is submitted by the product providers rather than the intermediary firms (see SUP 16.11 for details). This information enables us to:
(1) identify which intermediaries (and product providers) are selling particular types of product (so helping us target both our firm specific and our thematic work);
(2) identify business being undertaken by particular intermediary firms; and
(3) identify trends in different marketplaces, in connection with particular types of products and in connection with individual firms.
  • 31/05/2005

MIGI 11.2

Notifications

  • 01/12/2004

MIGI 11.2.1

handbook-guidance
In addition to regular periodic reporting, your firm must make notifications in certain circumstances. The main circumstances are set out below.
  • 01/12/2004

Matters having a serious regulatory impact

MIGI 11.2.2

handbook-guidance
Your firm must let us know immediately when it becomes aware, or has information that reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:
(1) if your firm fails to satisfy one or more of the threshold conditions (there is more information on these in Part I, Chapter 4 MIGI 4.2.6 G );
(2) any matter that could have a significant adverse impact on your firm's reputation;
(3) any matter that could affect your firm's ability to continue to provide adequate services to customers and which could result in serious detriment to a customer of the firm; or
(4) any matter in respect of your firm that could result in serious financial consequences to the financial system or to other firms.

Communications with us in line with Principle 11

MIGI 11.2.3

handbook-guidance
As set out in SUP 15.3.8 G , compliance with Principle 11 includes, but is not limited to, giving us notice of:

Core information where advance notice is required

MIGI 11.2.4

handbook-guidance
You need to give us advance notice if there is going to be a change to the following pieces of information:
  • 01/12/2004

General notification requirements

MIGI 11.2.5

handbook-guidance
There are also the following general notification requirements:

When should you notify us?

MIGI 11.2.6

handbook-guidance
If a notification rule requires you to send a notification within a specified period, you must send it in time for us to receive it before the end of the period. If the end of the period falls on a weekend or bank holiday, you must make sure it is received no later than the first business day after the end of the period. If a notification rule does not require notification within a specified period, then your firm should act reasonably in deciding when to notify us.
  • 01/12/2004

How do you notify us?

MIGI 11.2.7

handbook-guidance
An electronic notification form is available on the Firms Online system, which you should use to make these notifications. Information on Firms Online - including how to register, log on and use the system - is available at: www.fsa.gov.uk/pages/doing/regulated/firms/index.shtml.

MIGI 11.2.8

handbook-guidance
In some cases, where the matter is urgent and significant, you will need to telephone the Firm Contact Centre (see Part I, paragraph 20.1.13 for contact details).

MIGI 11.2.9

handbook-guidance
The main relevant Handbook section is SUP 15.

Other considerations

MIGI 11.2.10

handbook-guidance
You must take reasonable steps to ensure that all information that your firm sends to us is accurate, truthful, complete and not misleading.
  • 01/12/2004

MIGI 11.2.11

handbook-guidance
The following chapters of this Guide are also relevant:
  • 01/12/2004

Export chapter as

MIGI 12

Auditors

MIGI 12.1

Introduction

  • 01/12/2004

MIGI 12.1.1

handbook-guidance
We require mortgage and insurance intermediaries to appoint an auditor in certain circumstances. Mortgage and insurance intermediaries may also be required to appoint an auditor under the Companies Act 1985 ('CA 85') or other statutory provisions.
  • 01/12/2004

MIGI 12.1.2

handbook-guidance
This chapter will help you determine whether your firm is caught by our requirements or the CA 85 requirements to appoint an auditor and, if so, what FSA rules consequently apply to your firm and to your firm's auditor. However, if you are obliged to appoint an auditor under CA 85 or other statutory provisions you will also need to refer to the relevant legislation for details of what other non-FSA requirements apply to you.

MIGI 12.2

FSA and Companies Act 1985 requirements to appoint an auditor

  • 01/12/2004

FSA requirements - mortgage intermediaries

MIGI 12.2.1

handbook-guidance
Firms whose only regulated activities are mortgage mediation activities are not required to appoint an auditor under our rules (SUP 3.1) (but see paragraph 12.2.4 below).
  • 01/12/2004

FSA requirements - insurance intermediaries

MIGI 12.2.2

handbook-guidance
Under our rules, firms that carry on insurance mediation activities, whether or not they also carry on mortgage mediation activities, are exempt under SUP 3.1 from the requirement to appoint an auditor if:
(1) they do not hold client money or client title documents (such as bearer instruments); or
(2) where they hold client money, they hold it under a statutory trust, and the balance of the client money bank account does not exceed £30,000 at any time during a financial year (see also CASS 5.3).
  • 01/12/2004

MIGI 12.2.3

handbook-guidance
All other insurance intermediaries that hold client money or client title documents are required to appoint an auditor. The auditor has to provide a report to the firm, for each relevant period, on the firm's client assets (and this includes its handling of client money) in accordance with SUP 3.10. There is more information on the rules that apply to insurance intermediaries when handling client money in Part III, Chapter 2.

CA 85 requirements - mortgage and insurance intermediaries

MIGI 12.2.4

handbook-guidance
Small insurance and mortgage intermediaries that are limited companies or limited liability partnerships and are authorised by us are required to appoint an auditor under the CA 85.

Other FSA requirements relating to auditors

MIGI 12.2.5

handbook-guidance
A firm that has an auditor (whether appointed under the CA 85, other statutory provisions or our rules) will need to consider whether to notify us under Principle 11 (see Part I, Chapter 3) in the following circumstances:
(1) if the firm expects or knows its auditor will qualify his report on the audited annual financial statements or add an explanatory paragraph (SUP 3.7); or
(2) if the firm receives a written communication from its auditors commenting on internal controls (SUP 3.7).
  • 01/12/2004

Summary table

MIGI 12.2.6

handbook-guidance
The table below summarises when your firm will be required to appoint an auditor, either under our rules or CA 85, and the Handbook rules which will consequently apply to the firm and the auditor. The table assumes that your firm does not have to appoint an auditor for any other reason.
  • 01/12/2004

MIGI 12.2.7

handbook-guidance
Summary of audit requirements:
  • 01/12/2004

MIGI 12.2.8

handbook-guidance
The following chapters of this Guide are also relevant:

Export chapter as

MIGI 13

Record Keeping

MIGI 13.1

Introduction

  • 01/12/2004

MIGI 13.1.1

handbook-guidance
This chapter summarises our rules relating to the general requirement that firms maintain records of certain matters. This chapter also explains where you can find out more about the specific record keeping requirements that apply to mortgage and insurance intermediaries.
  • 01/12/2004

MIGI 13.2

General Requirement

  • 01/12/2004

MIGI 13.2.1

handbook-guidance
Your firm must take reasonable care to make and keep adequate records of matters and dealings (including accounting records) which are the subject of requirements and standards under the regulatory system. The records should be capable of being reproduced on paper in English (SYSC 3.2.20 R).
  • 01/12/2004

MIGI 13.2.2

handbook-guidance
Your firm should have appropriate systems and controls to fulfil its regulatory and statutory obligations on the adequacy, access, periods of retention and security of records. The general principle is that records should be kept for as long as is relevant for the purposes for which they are made. Records can be kept on computer disc so long as they are capable of being reproduced on paper.
  • 01/12/2004

MIGI 13.2.3

handbook-guidance
You will find detailed record keeping requirements throughout the Handbook. Schedule 1 to each of the sourcebooks and manuals is an overall summary of these requirements. For example, Schedule 1 to ICOB and Schedule 1 to MCOB summarise the record keeping requirements in those sourcebooks.
  • 01/12/2004

Export chapter as

MIGI 14

Complaints

MIGI 14.1

Introduction

  • 01/12/2004

MIGI 14.1.1

handbook-guidance
This chapter explains how your firm is required by our rules to handle complaints from your customers. It also explains that our rules require mortgage and insurance intermediaries to submit regular complaints reports to us so that we can monitor firms' regulatory compliance. The rules are in the Dispute Resolution: Complaints manual (DISP).

MIGI 14.2

How to handle a complaint

  • 01/12/2004

MIGI 14.2.1

handbook-guidance
There are many reasons why customers complain to firm. A complaint is any written or oral expression of dissatisfaction, and may arise in a wide variety of circumstances.
  • 01/12/2004

MIGI 14.2.2

handbook-guidance
If your firm receives a complaint from, or on behalf of, an eligible complainant about the way in which your firm has conducted its business, our rules require you to follow certain procedures. Broadly, an eligible complainant is a private individual or a business with an annual turnover of less than £1 million. There is a full list of eligible complainants in DISP 2.4.3 R. DISP 1.1.7 R explains how to notify us if your firm does not conduct business with eligible complainants.Eligible complainants can refer a complaint to the Financial Ombudsman Service (FOS) if they are unhappy with your firm's final response or if the firm is not in a position to give a final response after 8 weeks. (See Part I, Chapter 18 for more on the FOS.)

MIGI 14.2.3

handbook-guidance
Your firm is required to have in place and operate appropriate and effective procedures for handling any expression of dissatisfaction from an eligible complainant, whether oral or written, and whether or not you think the complaint is justified. The general requirements to have internal complaints handling procedures are set out in DISP 1.2. The procedures must be written down and must cover:
(1) receiving complaints;
(2) responding to complaints;
(3) the appropriate investigation of complaints; and
(4) notifying complainants of their right to go to the FOS where relevant.
DISP 1.2.16 R explains who in the firm should deal with complaints.
  • 01/12/2004

MIGI 14.2.4

handbook-guidance
Insurance intermediaries are also required to have in place and operate effective procedures for registering and responding to any expression of dissatisfaction received from, on or behalf of, someone who is not an eligible complainant and which relates to insurance mediation activity carried on by the firm (for example a complaint from a large corporate customer) (DISP 1.2.1A R). Note, however, that this procedure only needs to cover complaints about how your firm carries on insurance mediation activities. It does not, for example, need to cover complaints arising out of contractual disputes your firm may have about an agency agreement with an insurance company.
  • 01/12/2004

Where and when should you publicise your procedures?

MIGI 14.2.5

handbook-guidance
The requirements are as follows (see also DISP 1.2.9 R to DISP 1.2.15 G):
(1) You have to display a notice stating that the FOS covers your firm. The notice should be displayed in all of your branches or offices to which your customers have access.
(2) At or immediately after the point of sale, your firm has to refer your customers in writing to the availability of your internal complaint handling procedures - for example, in your initial disclosure documents or status disclosure.
(3) If you receive a complaint (unless it is resolved by the close of business the next day) or a request for a copy of the procedures, you have to supply a copy of your complaints handling procedures to the complainant.
(4) All of your employees need to be aware of the procedures.

How quickly do you need to deal with a complaint?

MIGI 14.2.6

handbook-guidance
You will want to resolve complaints quickly and efficiently, though the length of time that it takes you to investigate a complaint may vary. Under our rules, there are fixed periods, summarised in the flowchart below, within which you will have to inform your customer of your progress (full details of the time limits for dealing with complaints are in DISP 1.4):
  • 01/12/2004

MIGI 14.2.7

handbook-guidance
Complaints handling flowchart:
  • 01/12/2004

Where are the relevant Handbook sections?

MIGI 14.2.8

handbook-guidance
The complaints handling procedures are explained fully in chapter 1 of DISP which includes:
(1) the general requirements: DISP 1.2;
(2) additional requirements for internal complaint handling procedures: DISP 1.3; and
(3) the time limits for dealing with a complaint: DISP 1.4.

Complaints about matters that occurred prior to the commencement of regulation

MIGI 14.2.9

handbook-guidance
Complaints handling rules and the FOS are not limited to complaints relating to the activities of your firm after the start of mortgage regulation (NM) or when general insurance regulation (NGI) began. As set out in DISP 2.2.2A G, the complaints-handling rules and the FOS also apply where the activity to which the complaint relates occurred before NM (in relation to mortgage mediation activities) or NGI (in relation to insurance mediation activities), provided that:
(1) the complaint is made after NM or NGI (whichever is relevant);
(2) the firm concerned was a member of the Mortgage Code Compliance Board (MCCB) before NM or the General Insurance Standards Council (GISC) before NGI at the time the activity occurred; and
(3) the complaint is made by a complainant who is eligible. The FOS has discretion to treat the complainant as eligible, if they would have been entitled to refer their complaint to either the MCCB or the GISC before NM or NGI (whichever is relevant).

Record keeping requirements

MIGI 14.2.10

handbook-guidance
You are required to keep a record for a minimum of three years from when you receive a complaint from an eligible complainant (DISP 1.5). This is so that you meet our requirements and are able to co-operate with FOS if they ask for information about a complaint that is referred to them. The record should include the following information:
(1) the name of the complainant;
(2) the substance of the complaint;
(3) copies of correspondence between your firm and the complainant; and
(4) details of any redress offered by your firm.

MIGI 14.3

Complaints reporting to the FSA

  • 01/12/2004

MIGI 14.3.1

handbook-guidance
Under our rules, you need to send in a complaints report unless your firm only conducts business with clients who are not eligible complainants (which will be unlikely for small mortgage and insurance intermediaries) (DISP 1.1.7 R). Reports must be submitted electronically (see DISP 1.5.10 R to DISP 1.5.10A R), must cover the information in DISP 1.5.4 R and be in the format set out in DISP 1 Annex 1R
  • 01/12/2004

When and how often should I submit complaints reports?

MIGI 14.3.2

handbook-guidance
You are required to send a report to us twice each year within 30 business days of the end of the relevant reporting period. The reporting periods are:
(1) 1 April to 30 September; and
(2) 1 October to 31 March.

MIGI 14.3.3

handbook-guidance
There are transitional arrangements governing when mortgage and insurance intermediaries must submit their complaints reports if they become authorised before 1 April 2005. They will be required to submit their first complaints report for the period 1 April 2005 to 30 September 2005. The transitional provisions, which relate to DISP 1.5.4 R, can be found in the table at DISP TP 1.

How do I submit a report?

MIGI 14.3.4

handbook-guidance
You must submit reports electronically via the internet, using the 'Firms Online' system (www.fsa.gov.uk/pages/doing/regulated/firms/index.shtml).

MIGI 14.3.5

handbook-guidance
The following chapters of this Guide are also relevant:
  • 01/12/2004

Export chapter as

MIGI 15

Financial Crime

MIGI 15.1

Introduction

  • 01/12/2004

MIGI 15.1.1

handbook-guidance
One of our statutory objectives under the FSMA is to reduce financial crime. This chapter explains how our rules aimed at reducing financial crime apply to mortgage and insurance intermediaries.

MIGI 15.2

Financial Crime

  • 01/12/2004

What action does your firm have to take in relation to financial crime?

MIGI 15.2.1

handbook-guidance
The FSA's rules on systems and controls against money laundering, which are set out in SYSC 3.2, do not apply to mortgage intermediaries or to insurance intermediaries carrying on insurance mediation activities relating to general insurance and pure protection contracts. However, your firm is still required to maintain appropriate safeguards against financial crime and to comply with the general legal requirements relating to money laundering. Under the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) (see Part I, Chapter 3) an FSA authorised firm must ensure that it maintains adequate systems and controls to counter the risk of that firm being used to further financial crime.

MIGI 15.2.2

handbook-guidance
The following chapters of this Guide are also relevant:
  • 01/12/2004

Export chapter as

MIGI 16

Variation and cancellation of permission

MIGI 16.1

Variation of Permission (VOP)

  • 01/12/2004

MIGI 16.1.1

handbook-guidance
A firm must apply to us to vary its permission if it wants to do one or more of the following:
(1) carry on extra regulated activities;
(2) reduce the number of regulated activities it is permitted to undertake;
(3) vary the description of its regulated activities (including the removal or variation of any limitations); or
(4) add, remove or vary any requirement.
  • 01/12/2004

MIGI 16.1.2

handbook-guidance
Our rules on variation of permission are in SUP 6. There is a flowchart at SUP 6 Annex 2 that summarises the procedures for applying for a VOP. Limitations and requirements are covered in AUTH 3.6 and AUTH 3.7 and are also described in Part I, Chapter 4 of this Guide. Our powers are described in SUP 7 and ENF 3.

MIGI 16.1.3

handbook-guidance
If your firm intends to expand its business you should assess, taking appropriate professional advice where necessary, whether you will need to apply to us for a variation of permission before making any changes. If your firm is planning on varying its permission substantially, you should discuss these plans with us as early as possible.
  • 01/12/2004

MIGI 16.1.4

handbook-guidance
If your firm applies for a VOP to add new regulated activities, you should bear in mind that it is required to begin the activity within 12 months of being granted a variation of permission. We have the power to alter a firm's permission if it does not adhere to this rule, or if it ceases to provide a permitted regulated activity for a period of 12 months or more (regardless of when the permission was granted).
  • 01/12/2004

MIGI 16.1.5

handbook-guidance
If your firm is applying for a VOP that will require a change in the controlled functions of its approved persons, you should submit the necessary form at the same time as your application for the VOP. For more information on approved persons and where to find the relevant forms see Part I, Chapter 6 of the Guide.
  • 01/12/2004

MIGI 16.2

Cancellation of Permission

  • 01/12/2004

MIGI 16.2.1

handbook-guidance
If your firm wishes to cease carrying on all regulated activities for which your firm holds permission, you may apply for a cancellation of permission. You may do this whilst still carrying out business so long as your firm has formal plans to cease all regulated activities in the short term (normally 6 months from the date of application for the cancellation of permission). Our rules on cancellation of permission are in SUP 6. There is a flowchart at SUP 6 Annex 3 that summarises the procedures for applying for a cancellation of permission.
  • 01/12/2004

MIGI 16.3

Firms Online

  • 31/05/2005

MIGI 16.3.1

handbook-guidance
Authorised firms can complete a VOP or cancellation of permission request by using the Firms Online system at www.fsa.gov.uk/pages/Doing/Regulated/Firms/ or by calling the Firm Contact Centre on 0845 606 9966. (If you have a dedicated supervisor at the FSA you should call them in the first instance.)
  • 31/05/2005

Export chapter as

MIGI 17

Waivers and rule modifications

MIGI 17.1

Introduction

  • 01/12/2004

MIGI 17.1.1

handbook-guidance
We may, on the application or with the consent of your firm, direct that certain rules:
(1) are not to apply to your firm; or
(2) are to apply to your firm with specified modifications.
  • 01/12/2004

MIGI 17.1.2

handbook-guidance
This chapter explains the circumstances in which we will grant a waiver or rule modification and how you should apply for one.
  • 01/12/2004

MIGI 17.2

Waivers and rule modifications

  • 01/12/2004

What is the FSA's general approach to waivers and rule modifications?

MIGI 17.2.1

handbook-guidance
We can only grant a waiver where we are satisfied that:
(1) compliance by your firm with the rule would be unduly burdensome or would not achieve the rule's purpose; and
(2) the waiver would not result in undue risk to persons whose interests the rules are intended to protect.

MIGI 17.2.2

handbook-guidance
We do not grant waivers indefinitely. Your firm must reapply before a waiver expires if you wish it to continue. SUP 8 sets out our approach to waivers. Not all rules can be waived (see SUP 8.2.6 G to SUP 8.2.8 G). Schedule 6 to each sourcebook or manual identifies the rules in that sourcebook that can and cannot be waived.

MIGI 17.2.3

handbook-guidance
Unless there are exceptional circumstances, we normally publish details of waivers we have given. You can view the details of published waivers through the FSA Register. Before you do so, you will need to know the name of the firm. You can also view waivers in a consolidated list by rule. We update the list monthly.
  • 01/12/2004

MIGI 17.2.4

handbook-guidance
Authorised persons wishing to apply for a waiver should complete the 'waiver' application form available from 'Firms Online' at www.fsa.gov.uk/pages/Doing/Regulated/Firms/ or by calling the Firm Contact Centre on 0845 606 9966 for further information about how to apply.

What is waiver by consent?

MIGI 17.2.5

handbook-guidance
In exceptional circumstances where we consider that a waiver should apply to a number of firms, we may tell the firms concerned that the waiver is available. These firms will not have to make a formal application but will have to give their consent for the waiver to apply to them. You will find a list of 'waivers by consent' on the following FSA waivers page, which may be applicable to your firm (www.fsa.gov.uk/Pages/doing/regulated/notify/waiver/consent/index.shtml).

Export chapter as

MIGI 18

The FSCS and the FOS

MIGI 18.1

The Financial Services Compensation Scheme (FSCS)

  • 01/12/2004

What is the FSCS?

MIGI 18.1.1

handbook-guidance
We are required by the FSMA to establish a scheme for compensating consumers when authorised firms are unable, or are unlikely to be able, to satisfy claims against them. The body established to operate and administer the compensation scheme is the Financial Services Compensation Scheme Ltd (FSCS). The relevant FSA rules are in the Compensation sourcebook (COMP). For further information about the FSCS, please see its website at: www.fscs.org.uk.

What is the scope of the FSCS?

MIGI 18.1.2

handbook-guidance
The FSCS includes all firms conducting mortgage mediation and insurance mediation.

MIGI 18.1.3

handbook-guidance
If an authorised mortgage or insurance intermediary fails and it is unable to meet its obligations to its customers, then eligible claimants can seek compensation from the FSCS for their losses. The protection provided would broadly cover two types of situation where a firm has failed. The first covers the risk that the intermediary is holding a premium that it has not passed to the insurer or money from a paid claim is being held. The second situation covers mis-selling or bad advice given by the intermediary.
  • 01/12/2004

MIGI 18.1.4

handbook-guidance
For a claimant to receive compensation from the FSCS in relation to insurance or mortgage mediation carried on by an authorised firm, three criteria must be satisfied:
(1) the claimant must be eligible (broadly speaking, cover is limited to private individuals and small businesses) (COMP 4.2);
(2) the claim must be against an authorised firm that is unable, or likely to be unable, to satisfy claims against it (broadly speaking, insolvent); and
(3) it must be a 'protected' claim, that is to say that the claim must be in connection with protected mortgage business or protected non-investment insurance mediation (COMP 5.2.1 R).

What levels of compensation are provided by the FSCS?

MIGI 18.1.5

handbook-guidance
The compensation limit for insurance mediation where the intermediary fails is 100% of the first £2,000 and 90% of the remainder and 100% for claims in respect of a liability subject to compulsory insurance (COMP 10.2.3 R). (There are further details about what is compulsory insurance in the Handbook Glossary under the definition 'liability subject to compulsory insurance'.)

MIGI 18.1.6

handbook-guidance
The compensation limit for mortgage mediation is 100% of the first £30,000 and 90% of the next £20,000, making the maximum compensation £48,000 (COMP 10.2.3 R).
  • 01/12/2004

What is the contribution structure of FSCS?

MIGI 18.1.7

handbook-guidance
The FSCS is funded by levies on authorised firms. So, in addition to their FSA fees (see Part I, Chapter 19) authorised mortgage and insurance intermediaries will need to contribute towards the FSCS's operating costs and, if necessary, its compensation costs.

MIGI 18.2

The Financial Ombudsman Scheme (FOS)

  • 01/12/2004

What is the FOS?

MIGI 18.2.1

handbook-guidance
The FOS has been set up to resolve disputes between consumers and firms. Its decision making is independent of the FSA. The FOS provides a mechanism for resolving disputes, which is a simple, informal and accessible alternative to the courts. FOS's compulsory jurisdiction covers complaints against authorised firms concerning their regulated activities and certain other specified financial services activities. It is provided free of charge to complainants. FOS's decisions are based on what is 'fair and reasonable' and are binding on firms if a complainant accepts them. The rules relating to the FOS are in DISP. For further information on the FOS, please see its website at www.financial-ombudsman.org.uk.

What is the scope of the FOS?

MIGI 18.2.2

handbook-guidance
The compulsory jurisdiction of the FOS includes firms carrying out insurance mediation and mortgage mediation.

How is the FOS funded?

MIGI 18.2.3

handbook-guidance
The FOS is funded in part by a general levy (payable by all firms covered by the scheme) and in part by case fees (i.e. a fee paid by firms for each chargeable complaint against them handled by the FOS).

The following chapters of this Guide are also relevant:

Export chapter as

MIGI 19

Fees

MIGI 19.1

Introduction

  • 01/12/2004

MIGI 19.1.1

handbook-guidance
We are an independent, non-governmental body, which is funded by levies on the financial services industry. We receive no funds from the public purse. Broadly, we use three main types of fee to finance our activities:
(1) Application fees contribute to the cost of processing applications for authorisation or recognition, or requests for significant variations to the permission of firms that are already authorised.
(2) Periodic fees are paid annually, to provide most of the funding we require to undertake our statutory functions.
(3) Special Project fees. These are unlikely to apply to small firms, so they are not covered in this Guide.
  • 01/12/2004

MIGI 19.1.2

handbook-guidance
This chapter explains more about application fees and periodic fees and how they will apply to your firm.

MIGI 19.2

FSA fees

  • 01/12/2004

How do FSA fees work?

MIGI 19.2.1

handbook-guidance
We have a number of 'fee-blocks', which group together firms carrying out similar regulated activities, reflecting the fact that they pose similar risks to our objectives. A firm may fall into one, or more than one, fee-block, depending on the scope of its permission.
  • 01/12/2004

What are application fees?

MIGI 19.2.2

handbook-guidance
Any firm applying to us for authorisation has to pay an application fee. We also charge an application fee where currently authorised firms seek significant variations to their permission. Application fees must be paid whether or not the application is successful and are not refundable. This reflects the fact that we commit resources to applications when they are received, so all applications have a cost to us regardless of their outcome.
  • 01/12/2004

MIGI 19.2.3

handbook-guidance
Application fees for mortgage and insurance mediation activities are flat rate fees (currently £1,500).

MIGI 19.2.4

handbook-guidance
An authorised firm may seek to significantly vary the scope of its permission, and that variation, if granted, may cause it to fall into new fee-blocks it was not allocated to before the variation. In these cases, a variation of permission fee is payable, charged at 50% of the equivalent application fee that a new firm falling into the new fee-block(s) would pay.
  • 01/12/2004

MIGI 19.2.5

handbook-guidance
Application fee rates for mortgage and insurance intermediaries are in FEES 3 Annex 1 R.

What are periodic fees?

MIGI 19.2.6

handbook-guidance
We use our periodic (annual) fees to recover the costs we expect to incur in undertaking our functions. From our budget each year we derive our Annual Funding Requirement (AFR). This total figure is split into an AFR for each fee-block, using our internal costing system. Typically, the permission granted to a firm advising on or arranging mortgages would cause the firm to be allocated to fee-block A.18. A firm carrying out non-investment insurance mediation would typically be allocated to the A.19 fee-block. If a firm is carrying out both types of activities it would be allocated to both fee blocks, and pay a fee in each.

MIGI 19.2.7

handbook-guidance
The scale on which a firm undertakes activities is measured by each fee-block's 'tariff-base'. The tariff-base is a 'size of business' measure. The tariff-base for the A.18 and A.19 fee-blocks is based on the income a firm earns from carrying out mortgage mediation and insurance mediation activities, respectively. A further explanation of what counts towards the income of a firm conducting mortgage mediation activities, or insurance mediation activities, or both, can be found in FEES 4 Annex 2 R Part 1. Note that this differs from the annual income calculation used for capital and PII requirements (see Part I Chapters 7 and 8).

MIGI 19.2.8

handbook-guidance
By applying the tariff-base to its business a firm obtains its own 'individual tariff data'. The periodic fees for the firm can then be calculated by combining the firm's individual tariff data with the fee tariff rates for each fee-block it falls into. So, for each fee-block that a firm falls into, the fee calculation is:

Periodic fee = (tariff base data for firm) applied to (fee-block tariff rates)
  • 01/12/2004

MIGI 19.2.9

handbook-guidance
The fee tariff rates for each fee-block are in FEES 4 Annex 2 R

Where are the relevant Handbook sections?

MIGI 19.2.10

handbook-guidance
The main sections of the FSA Handbook relating to fees that small firms should be aware of are:
(1) general provisions regarding fees: FEES 2 ;
(2) application fee rules: FEES 3 and associated Annexes;
(3) periodic fee rules, current rates per fee-block and fee-block definitions: SUP 20 and associated Annexes; and
(4) permission variations: SUP 6 (SUP 6.3.22 R).

MIGI 19.2.11

handbook-guidance
Firms should also be aware that in January of each year we produce a consultation paper indicating the proposed fee rates for the coming financial year (1 April - 31 March). The FSA Board makes the final fee rates for the financial year in May (with the exception of application fee rates, which are made in March, before the beginning of the financial year). Small firms should expect to receive a periodic fee invoice in June/July each year.
  • 01/12/2004

MIGI 19.2.12

handbook-guidance
In June each year our Consolidated Policy Statement on our fee raising arrangements is updated. This document provides further detail on our fee policy, and you will find it under the Publications section of our website:www.fsa.gov.uk/Pages/Library/Policy/Policy/index.shtml

MIGI 19.2.13

handbook-guidance
The following chapters of the Guide are also relevant:
  • 01/12/2004

Export chapter as

MIGI 20

Further information

MIGI 20.1

FSA contacts

  • 01/12/2004

Handbook and publications

MIGI 20.1.1

handbook-guidance
Our website: www.fsa.gov.uk
(A) Mortgage and general insurance home page: www.fsa.gov.uk/pages/Doing/Info?MGI/index.shtml
(C) Handbook orders: online at www.tso.co.uk/bookshop/bookstore.asp?DI=510152
(D) Handbook subscriptions and amendments helpline: 0845 608 2372
(E) Technical queries on the CD-ROM: technical.queries@fsahandbook.info.uk or 0845 082 1031
(F)

MIGI 20.1.2

handbook-guidance
Our website is an essential resource for firms, providing fully updated information and help. Click on 'FSA Handbook' and you have access to the full Handbook. You will also be able to access the Reader's Guide, Forms and Guidance Notes. Our website also includes information on Periodic Fees for mortgage and insurance intermediaries.

MIGI 20.1.3

handbook-guidance
Only some of our rules and guidance apply to mortgage and insurance intermediaries. To help these firms, we have brought the relevant provisions together into 'Tailored Handbooks', one for mortgage intermediaries and another for insurance intermediaries. You can access these from the mortgage and general insurance home page: www.fsa.gov.uk/pages/Doing/Info/MGI/index.shtml.

MIGI 20.1.4

handbook-guidance
Clicking on 'Doing Business with the FSA' gives you access to information on a range of topics that are relevant to firms.

MIGI 20.1.5

handbook-guidance
Click on 'About the FSA - What we do', for an explanation of the functions of the organisation's different parts.

MIGI 20.1.6

handbook-guidance
The FSA Register is also on our website (www.fsa.gov.uk/Pages/register/). It lists the permission of every FSA authorised firm and the controlled functions allocated to every registered individual.

MIGI 20.1.7

handbook-guidance
We have specifically dedicated an area of our website for mortgage and general insurance regulation - www.fsa.gov.uk/pages/Doing/Info/MGI/Index.shtml. This includes:

FSA Industry Training Courses, FSA Events and Conferences

MIGI 20.1.8

handbook-guidance
FSA Industry Training Department: see our website for details: www.fsa.gov.uk/Pages/Doing/Events/index.shtml

MIGI 20.1.9

handbook-guidance
FSA Events and Conferences: Contact the FSA Events team by phone on 020 7066 0098, by fax on 020 7676 0063 or email at events@fsa.gov.uk.

FSA Authorisation

MIGI 20.1.10

handbook-guidance
Firms should no longer use the High Street Firms Application Pack and online application service to apply for authorisation to carry on mortgage business and mediation of non-investment insurance contracts. Instead, firms need to complete the appropriate Part IV Permission Application Pack. For more information about applying for authorisation, please see our Authorisation pages at: www.fsa.gov.uk/Pages/Doing/Info/MGI/Authorisation/index.shtml.

FSA Fees

MIGI 20.1.11

handbook-guidance
A fee calculator is available on the website at: www.fsa.gov.uk/Pages/Doing/Info/MGI/regulated/calculator/index.shtml. This can give you an indication of the annual fees firms doing mortgage and non-investment insurance mediation will pay based on the fee rates consulted on. The calculator is indicative only and does not give firms a definite indication of their periodic fees for 2005/06 or future years. Nor does it take into account the fee discounts for firms in multiple fee-blocks we proposed in Consultation Paper 05/2.

MIGI 20.1.12

handbook-guidance
For invoice calculation, tariff data and payment queries, including moving to direct debit, contact the Fees Helpline by e-mail: fsafees@fsa.gov.uk, or telephone 020 7066 1888. You can also write to the Revenue Department, Revenue & Information Management at the FSA.
  • 31/05/2005

Firm Contact Centre

MIGI 20.1.13

handbook-guidance
Our Firm Contact Centre will be the main point of contact for small firms. This is where you should direct any queries about regulation and the FSA Handbook. You can reach the Firm Contact Centre by e-mail at fcc@fsa.gov.uk or by telephoning 0845 6069966. Lines are open between 9.00 am and 5.00 pm Monday to Thursday and 10.30 am to 5.00 pm on Friday.
  • 31/05/2005

MIGI 20.2

Other contacts

  • 01/12/2004

Financial Ombudsman Service (FOS)

MIGI 20.2.1

handbook-guidance
For queries about payment and accounts for the FOS annual levy, contact the FSA fees helpline by e-mail: fsafees@fsa.gov.uk or telephone 020 7066 1888.

MIGI 20.2.2

handbook-guidance
For informal advice and guidance on ombudsman procedures, policy and decisions - contact the technical advice desk by email: technical.advice@financial-ombudsman.org.uk or telephone 020 7964 1400.
  • 01/12/2004

Financial Services Compensation Scheme (FSCS)

MIGI 20.2.3

handbook-guidance
Contact the FSCS by email: enquiries@fscs.org.uk or telephone 020 7892 7300.

Export chapter as

MIGI APP 1

Appendix A: brief description of key terms in the Guide

MIGI APP 1.1

Appendix A: brief description of key terms in the Guide

  • 01/12/2004

MIGI APP 1.1.1

handbook-guidance

Export chapter as

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