Misrepresentation, Non-Disclosure and Breach ... - Law Commission

9.101 For these types of activity, there is a limited exemption for professions or
businesses who only provide such information or introduction incidentally to their
main business. 66 In the FSA’s view, the insurance aspect must be
complementary to the main business. 67 For example, the exemption covers a
dentist who introduces dental insurance, or a vet who introduces pet insurance.
However, if a vet were to introduce dental insurance, this would not be
complementary and would therefore require authorisation or exemption.
9.102 A much more extensive exemption applies to travel agents and tour operators
who arrange travel insurance and to retailers who arrange product insurance for
“non-motor” goods. 68 The insurance must be complementary to the goods, such
as a mobile phone shop that arranged mobile phone insurance. The rationale
behind this exemption is that it is limited to insurance that is relatively cheap and
simple. The premium must not exceed 500 euros, 69 and the policy must not last
longer than 5 years. 70 Furthermore it must be
of such a nature that the only information that [the agent] requires…
is the cover provided by the contract. 71
9.103 Where travel agents, tour operators 72 and product retailers fall within their
exemption, they may arrange insurance, fill in forms and advise on insurance
contracts without any form of FSA regulation. The Treasury recognised that there
were concerns about this, and promised to review the exemption two years after
implementation. The Treasury has called for evidence on the subject. 73
The effect
9.104 The effect of these provisions is that most intermediaries who misadvise
consumers about their disclosure requirements or who wrongly fill in proposal
forms will be within the scope of FSA regulation. For most UK organisations, they
must either be authorised in their own right, or must be appointed representatives
of other authorised bodies.
66 Regulated Activities Order, art 72C.
67 See PERG 5.6.7.
68 Regulated Activities Order, art 72B.
69 Above, at art 72B(1)(c).
70 Above, at art 72B(1)(b).
71 Above, at art 72B(1)(g).
72 Technically, the exemption applies to insurance covering travel risks linked to travel
booked with the provider. This means it may extend more widely than just travel agents
and tour operators, and include airlines, ferries, holiday villa rental companies, hotels and
car hire companies selling risks of loss to baggage.
73 HM Treasury, Travel Insurance Review: Call for Evidence, November 2006. On 26 June
2007, as this report was going to press, the Treasury announced that the sale of travel
insurance alongside a holiday would be regulated by the FSA: see http://www.hmtreasury.gov.uk/newsroom_and_speeches/press/2007/press_71_07.cfm.
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