New FSA travel insurance regime will protect consumers
18th December 2007The Financial Services Authority (FSA) today published a Consultation Paper setting out its detailed plans for regulating travel insurance sold alongside a holiday - known as Connected Travel Insurance (CTI) - which is mainly sold by travel firms and holiday providers.
This follows the Treasury's announcement last week confirming that the FSA will regulate CTI. The FSA already regulates stand-alone travel insurance, i.e. not connected to any particular travel arrangements and bought direct from an insurer or through an insurance broker.
Dan Waters, FSA Director Retail Policy, said:
"We have carefully considered the CTI market in constructing the new regime. It is designed to be proportionate to the way the market operates and the risks it poses to consumers."
The new regulatory regime will be based on high-level rules and guidance with the aim of ensuring that:
- firms are fit and proper and appropriately resourced;
- firms' staff are competent to undertake the business they do;
- customers get sufficient, clear, concise and consistent information about a firm's services and products so they can make informed choices;
- customers who want advice receive good quality advice and are sold suitable products which take account of their circumstances and needs; and
- if things go wrong, customers are able to seek redress.
Travel firms will need to decide whether to be authorised by the FSA, become representatives of another authorised firm or no longer offer CTI products. They may also become an unregulated introducer in certain limited circumstances.
Following the consultation period, ending on 18 March 2008, the new connected travel insurance regime will come into force from 1 January 2009.
