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

(3) whether the firm has or will provide advice or information
(a) on the basis of a fair analysis of the market; or
(b) from a limited number of insurers; or
(c) from a single insurer. 76
9.109 The intermediary must also inform its clients if it holds money on behalf of the
insurer. The relevant rule states that:
Where a firm holds, or is to hold, money as agent for an insurance
undertaking it must ensure that it informs those of its clients which are
not insurance undertakings and whose transactions may be affected
by the arrangement (whether in its terms of business, client
agreements or otherwise in writing) that it will hold their money as
agent of the insurance undertaking and if necessary the extent of
such agency and whether it includes all items of client money or is
restricted, for example, to the receipt of premiums. 77
9.110 As we discussed above, some of these issues may be relevant to whether the
intermediary acts for the insured or for the insurer for disclosure purposes. 78 If an
intermediary provides advice to the insured on the basis of a fair analysis of the
market, they are likely to act for the insured. If, however, they act as the insurer’s
appointed representative they will typically be the insurer’s agent. But the
information disclosed will often not determine the issue. As we have seen, it is
unclear whether those who sell from a single insurer will be regarded as the
insurer’s agents if they do not actively solicit business for the insurer. The
position of those selling from a limited number of insurers is also uncertain.
Furthermore, the fact that the intermediary holds money on behalf of the insurer
may be some evidence of an agency agreement between them, but would not be
determinative. FSA regulation does not require intermediaries to say for whom
they act.
9.111 Under ICOB 4.3.2 an intermediary is required to explain the potential impact of
non-disclosure, but again there is no specific mention of the agency issue.
9.112 The FSA Rules do not address the situation where an intermediary incorrectly
completes a proposal form. Thus the rule in Newsholme is left unchanged.
76 FSA Handbook, ICOB 4.2.8R(6).
77 FSA Handbook, CASS 5.2.3(3).
78 See para 9.22.
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