transitional arrangements for insurance intermediaries

In issue 42 of ombudsman news, we noted that our jurisdiction has recently expanded to include insurance intermediaries. This article outlines the insurance intermediary activities that are now covered by the Financial Ombudsman Service. It also explains the arrangements for dealing with relevant transitional complaints – those that concern events that occurred before insurance intermediaries joined our jurisdiction.

firms within our jurisdiction

From 14 January 2005, the following activities became regulated by the Financial Services Authority (and therefore fell within our jurisdiction):

	dealing in insurance contracts as agent
	arranging deals in insurance contracts
	advising on insurance contracts
	assisting in the administration and performance of insurance contracts.

This means that many firms which carried out such activities and were previously outside our jurisdiction – such as insurance brokers – are now covered by the ombudsman scheme. We also have jurisdiction over firms that have been granted interim permission by the Financial Services Authority to carry out general insurance mediation activities.

There are a few specific exceptions to this extension of our jurisdiction:

	travel agencies – when the insurance is sold as part of a package holiday
	retailers – when selling extended warranties on some goods, such as refrigerators and televisions
	loss adjusters – but not loss assessors who act for customers in relation to insurance claims; and
	the handling of insurance claims on behalf of insurers under a delegated authority.

retrospective jurisdiction

As well as having jurisdiction over complaints about events occurring on or after 14 January 2005, the Financial Ombudsman Service also has a limited ‘retrospective’ jurisdiction. This covers some complaints about events that occurred before 14 January 2005. The retrospective jurisdiction comes about because of provisions set out in a statutory instrument informally known as The Mortgage & General Insurance Transitional Order. The Order allows us to look at complaints about intermediary activities that occurred before 14 January 2005 if:

	the firm was a member of the General Insurance Standards Council at the time of the event complained about
	the complaint would previously have been covered by the General Insurance Standards Council Dispute Resolution Facility
	the complainant is an individual who is acting otherwise than solely for the purposes of his business; and
	the firm became regulated by the Financial Services Authority on or after 14 January 2005.

Such complaints are known as relevant transitional complaints. While we will determine them in line with our ‘fair and reasonable’ jurisdiction, we must also take into account what the General Insurance Standards Council might have decided. We will not have jurisdiction over any complaints that the Council was already handling before 14 January 2005. Our usual time limits will apply.

In a future issue of ombudsman news we will include case studies illustrating some of the jurisdiction issues surrounding transitional arrangements for intermediaries. In the meantime the following flow chart should help to clarify which retrospective complaints we are able to look at.