The FSA has recently stripped 19 small financial firms of their authorisations to do investment business because they breached the regulator’s operating conditions.
Stephanie Murdoch, of FSA compliance organisation Auto Network UK, says: "This proves that this regulator has the teeth to enforce its regulations and the motor industry should be mindful of this fact, with less than 4 months to go to the 14th January deadline for compliance."
At the deadline of July 13, the FSA had only received 3,781 applications from the whole of the secondary insurance market which includes motor retailers planning to sell insurance and insurance related products.
In January 2005, new legislation will stop businesses offering insurance unless they either have direct authorisation from the FSA or are an appointed representative of an approved network.
For motor manufacturers with franchise dealers actively involved in selling or advising on insurance products and for independent motor retailers doing the same, there is an urgent need to ensure they are FSA approved.
According to Auto Network UK, the procedure for gaining direct authorisation is not as straightforward as many in the motor trade had thought it would be. Feedback received by Auto Network UK suggests many dealers are confused about how the new regulations will affect them and are concerned about the obligations they have as a directly authorised firm. In addition, Auto Network UK has anecdotal evidence that some motor retailers believe they have applied for authorisation, simply because they registered for the application forms.
"This is just not the case," Murdoch says. "And it is very worrying that so many motor retailers may find themselves in a situation where one of their key revenue streams is cut off from January 14th next year."