Just how is my life insurance being regulated?

Tuesday, February 16, 2010

When entering into a long term and what could even be life long contract, it is nice to know that it is held accountable to some sort of governing body. Well here is how it works with the life insurance industry.

Life insurance, as well as all other insurance companies, answer to the Financial Services Authority (FSA). This is the same governing body that holds banks, insurance intermediaries and financial advisors accountable as well. The one exception, travel insurance, which has traditionally been sold by travel agents, has also now come under management of the FSA regulations.


A little about the FSA

The FSA is an independent organisation responsible for regulating all financial services within the borders of the UK. Its goal is to endorse efficient, fair and accurate financial markets. It also has the intent of making sure that consumers of retail financial services get a fair deal. This body was established by the government and the government remains responsible for all of the FSA’s activities with regards to regulation. The FSA sets the guidelines with which a firm or indvidual may seek financial restitution.

What else can be done?

Should you seek to file a claim and the insurer is unable to compensate you for whatever reason there is still one place to go. This is the Financial Services Compensation Scheme (FSCS). The FSCS is a last resort statutory fund that seeks to compensate those that have made a claim against an insurer that may have stopped trading or is in insolvency. It is a free service to consumers. The FSCS was established under the Financial Services and Markets Act 2000(FSMA) and became the single compensation scheme on 1 December 2001. It is quite a forward thinking law that is funded by levies on authorised firms and even takes into account European and other international firms operating within the UK.


Dave Gibbons