Questions about legal, complaints & regulatory
aspects
- Life Insurance and the Law
- Information about The Financial Services Authority
- Complaining about a Life Insurance Company
- Complaining about a Life Insurance Broker
- Complaining about misleading advertising
- Our Disclaimer
Life Insurance and the Law
The following represents the legal aspects we think you will be most
interested in, as it relates to buying life insurance through the Internet. The information
is neither definitive nor exhaustive but simply an introduction.
If you require more information relating to the regulation of life insurance companies
or insurance brokers, we recommend you visit the Financial Services Authority’s
web site which is:
www.fsa.gov.uk
You must live in the UK in order to take out a life insurance policy from a UK based insurance company. This is not specifically laid down in UK law, but UK laws and tax regulations make it impossible for a UK based insurance company to offer life insurance to anyone other than a UK resident.
There are no laws in the UK that stipulate that a person must have life insurance. It is an entirely voluntary form of insurance.
As a UK resident you buy life insurance from a UK based insurance company. As such, your insurance company is subject to all UK Corporate Laws. However, there are also Laws that apply solely to insurance companies. These regulate the value of the risks they take on in relation to their financial reserves. These laws are designed to ensure that your insurance company will be in a position to pay if you claim.
The Data Protection Act 1998 is concerned with way all UK organisations store, safeguard and use the data they have collected about people. This is particularly important within the life insurance industry as the companies involved accumulate significant amounts of information about you – including your age and hobbies to the very sensitive area of medical information. One of the key provisions of the Data Protection Act is that if a company wishes to pass on your information for marketing purposes, the company collecting the data must tell you and give you the opportunity of refusing permission for your information to be used in this way.
All reputable web sites concerned selling life insurance will have a “Privacy Statement” which tells you how they handle your information and how they use it. We suggest you read their Privacy Statement.
The most important piece of legislation affecting the promotion of financial services is the Financial Services and Markets Act (2000). This Act is extremely complex but is primarily concerned with the protection of the consumer. Its provisions currently centre on investment products, investment institutions and the provision of investment advice. In early in 2005 its Regulations are due to widen to include mortgages and general insurance, including life insurance.
The Financial Services and Markets Act (2000) seeks to ensure that the people who provide investment advice are trustworthy and competent (which includes being well supervised and well trained), and that any advice is given in your best interests. The Act also seeks to ensure that you are given full and accurate information about the products you have selected, or are being advised to buy, both before and after you have bought them.
It also closely regulates the organisations that sell investment products and the advice they provide. Everyone and every organisation that provides investment advice must be registered with the Financial Services Authority. As we reported above, this definition will be expanded to include mortgages and insurance in early 2005.
The Act differentiates between investments made as a result of a recommendation from a Financial Adviser and an investment the customer is wholly responsible for the selection of the investment (in which case the Financial adviser was simply processing the purchase of the investment on the clients’ behalf and provided no advice whatsoever). The latter situation is called “execution only” business.
Under “execution only” business the Advisers’ responsibility is restricted to the efficient processing of the purchase. He or she bears no responsibility for the suitability of the product for the customers needs.
At the outset, all customers buying through a Financial Adviser must be informed in writing of the Advisers’ Terms and Conditions of business. These will include details of a complaints procedure that is carefully laid down by the Financial Services Authority and is meticulously implemented and scrutinised by them. But in outline, if a customer has a complaint, then the complaint has to be explained by them in writing and sent to the Compliance Officer of the business that provided the advice. The organisation then has to investigate the complaint and provide a reasoned written reply to the customer. If the Compliance Officer upholds the complaint, and the customer has occasioned a financial loss as a result, then the organisation must agree a financial settlement with the client. Ultimately, if the customer has suffered financial loss and cannot accept either the organisations’ conclusions or their proposed financial settlement, then the case can be submitted to the Financial Ombudsman. The Financial Ombudsman’s service if free to the customer and they are totally independent. Their decision is usually binding on both parties.
The other central protection for the customer is the Financial Services Compensation Scheme. This provides the you with a level of protection if a UK financial organisation becomes bankrupt or cannot properly meet its’ financial responsibilities to investors.
Life insurance purchased on the Internet
You will find two categories of web site – those operated by organisations that
are regulated by the Financial Services Authority and sites that are unregulated. If
a web site is regulated by the Financial Services Authority it must tell you that it
is regulated and many will feature the FSA’s logo.
Few web sites selling life insurance will offer you personal advice but will provide you with information upon which you can make an informed choice. This is understandable because, in order to give personal advice, they would need have conducted a lengthy Fact Find in order thoroughly understand your personal circumstances. This is simply not practical on the Internet.
The following Frequently Asked Questions are related to the above topic. You may care
to read them: -
Information about The Financial Services Authority
Complaining about a Life Insurance Company
Complaining about a Life Insurance Broker
Complaining about misleading advertising
Information about The Financial Services Authority
Who is the Financial Services Authority? (FSA)
The FSA is an independent non-government body. It has been given legal powers under the Financial Services and Market Act 2000.
The FSA are a company limited by guarantee and financed by the financial industry. HM Treasury appoints their Board.
This Board sets the FSA’s policy, but day-to-day matters are the responsibility of the Executive.
What does the FSA do?
The FSA has four aims:
- To preserve confidence in the UK’s financial system – The FSA achieve this by, for example, supervising financial exchanges and other market infrastructure providers; conducting market surveillance; and monitoring transactions.
- To advancing the public’s understanding of the UK’s financial structure – The FSA help people gain the understanding, ability and skills needed to become knowledgeable consumers, so that consumers can more effectively manage their financial affairs.
- To achieve the appropriate level of protection for consumers – the FSA vets everybody at the application stage of entry to the FSA and aims to admit only those firms and individuals who meet the necessary criteria (including honesty, competence and financial standing) to be involved in regulated financial activity. Once authorised, the FSA expect firms and individuals to maintain set standards defined by the FSA. The FSA then examines how far the firms and individuals achieve these standards. Where serious problems are recognised the FSA investigates and, if appropriate, disciplines or prosecutes those responsible. The FSA can also use their powers to return funds to clients.
- To help to reduce financial crime – the FSA concentrates on three main types of financial crime: money laundering; fraud and dishonesty; and criminal financial misconduct (such as insider dealing).
Whilst working towards these aims, the Financial Services Authority takes account of the following:
- The need to use resources in a cost effectively and efficiently;
- The responsibility of the management in regulated businesses;
- The requirement to balance the restrictions on financial firms with the benefits for clients and industry of the FSA’s regulation
- The need to allow innovation to thrive;
- The international character of financial markets and services and the UK’s competitive position; and finally
- The value of competition between financial organisations
Regulating insurance intermediaries
In the near future the Financial Services Authority will also regulate the sale of insurance products such as house and car insurance, and life insurance. This follows the Insurance Mediation Directive from the European Parliament. This Directive requires formal regulation of general insurance brokers. The FSA is currently consulting to ensure that the new regulations provide appropriate protection for clients whilst retaining the benefits of competition and innovation.
The Directive is expected to be implemented in the UK in early 2005.
How to visit the FSA website
Their address is www.fsa.gov.uk
The following Frequently Asked Questions are related to the above topic. You may care
to read them: -
Life Insurance and the Law
Complaining about a Life Insurance Company
Complaining about a Life Insurance Broker
Complaining about misleading advertising
Complaining about a Life Insurance Company
If you wish to make a complaint to a Life Insurance Company you should write to their Compliance Director.
You will find full details how to complain within the Booklet issued by the insurance company under “complaints procedure”. This booklet will have been sent to you when you applied for your policy.
The insurance company will examine your complaint and to reply to you in writing detailing the results of their investigations.
If you are dissatisfied with their reply and you have financially worse off, you can write to the Financial Ombudsman Service. They will carry out a separate independent investigation. The results of this and their recommendations, including any level of compensation, are usually binding on both you and the insurance company.
The following Frequently Asked Questions are related to the above topic. You may care
to read them: -
Information about The Financial Services Authority
Life Insurance and the Law
Complaining about a Life Insurance Broker
Complaining about misleading advertising
Complaining about a Life Insurance Broker
If your Life Insurance Broker is regulated by the Financial Services Authority he will
have given you his Terms and Conditions at your very first meeting. Alternatively, if
you purchased through a regulated Brokers web site, then the site will have contained
their Terms and Conditions and you will have been advised to read them.
You will find details of how to complain within those Terms and Conditions.
If you have a complaint and your the Life Insurance Broker is not regulated by the Financial Services Authority, then we suggest you write to the Chief Operating Officer/Managing Director at the Brokerage. You should also send a copy of your complaint to the insurance company who issued your policy addressed to the Compliance Officer.
You should be aware that as from early 2005, the Financial Services Authority will regulate all Life Insurance Brokers.
If the web site you wish to complain about is operated by an organisation which is regulated by the Financial Services Authority, their site clearly inform you that the business is regulated. However, the probability is that web site will not have provided personal advice to you. If this is the case, then the business you transacted is called “execution only” and your rights of complaint become limited. You will need to refer to their Terms and Conditions.
Most web sites are currently unregulated although this will change in 2005 (see above). The majority of sites do not provide personal advice although they do provide plenty of useful information to help you make your own decision. They are generally of a good or high standard although it is important that you read the insurance company’s documents to ensure that you are getting exactly what you need.
If you have a complaint about a web site through which you bought life insurance, we suggest you write to the Chief Operating Officer or Managing Director of the company operating the web site. You should also send a copy of your complaint to the Compliance Officer at the insurance company who issued your insurance policy.
The following Frequently Asked Question is related to the above topic. You may care to
read it: -
Complaining about a Life Insurance Company
Complaining about misleading advertising
Information about The Financial Services Authority
Complaining about misleading advertising
If you believe that a web site contains misleading advertising then you should write to the Advertising Standards Authority. Their web site (www.asa.org.uk) gives you full details of how to make a formal complaint.
If you have purchased insurance through the web site, an additional remedy is to write to your insurance company. Address your complaint to their Compliance Director. They do not have a formal responsibility for policing their “retailers” but in all probability they will be interested, as they will not want to be associated with any site that contains misleading advertising.
The following Frequently Asked Question is related to the above topic. You may care to
read it: -
Complaining about a Life Insurance Company
Complaining about a Life Insurance Broker
Information about The Financial Services Authority
Disclaimer
The information contained on this web site is designed to help you make an informed choice when you purchase life insurance and related protection insurance via this web site.
The information should not be construed as specific advice to you personally.
We have tried to make sure that the information we provide is up to date and accurate. However, we make no representation or warranty, express, or implied, as to the completeness or accuracy of the information provided.
So far as permitted by United Kingdom Laws, the owners and operators of this web site and their management and staff, hereby disclaim liability for any loss arising directly or indirectly and however caused from the use and contents of this web site.
--Please Note --This web site is owned and managed by Alliance Internet Ltd.. Alliance Internet Ltd is an Appointed Representative of Financial Connexions Ltd. Financial Connexions Ltd is authorised and regulated by the Financial Services Authority.