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Sale of Financial Products

Volume 447: debated on Thursday 8 June 2006

To ask the Chancellor of the Exchequer if he will undertake a public consultation on further regulation of the sale of general insurance. (75793)

The Financial Services Authority (FSA) assumed responsibility for the regulation of general insurance on 14 January 2005. The FSA’s regime served to implement the EU’s Insurance Mediation Directive (IMD) in the UK.

The FSA began a review of the effectiveness of the general insurance regime in April 2006. This review will include seeking feedback from firms and consumer research.

Separately, the Treasury will review early in 2007 whether travel insurance sold as part of a package should be subject to FSA regulation. The IMD only requires the regulation of travel insurance if sold on a stand-alone basis.

To ask the Chancellor of the Exchequer what regulations apply to the selling of complex financial products on a non-advised basis. (75795)

Regulations applying to the sale of complex financial products are governed by the Financial Services and Markets Act 2000. They are implemented by conduct of business rules set by the Financial Services Authority on the principle that firms making sales on an advised or non-advised basis should treat their customers fairly and provide them with clear information. The rules are set out in the Financial Services Authority’s Handbook.