Professional & Financial Services UK-wide

FCA authorisation for insurance brokers

How to get FCA authorisation as an insurance intermediary. Covers Insurance Distribution Directive requirements, permission types, professional indemnity insurance, capital requirements, and Appointed Representative arrangements.

Guide summary

Apply for FCA authorisation if you want to arrange, advise on, or help with insurance in the UK. You can also become an Appointed Representative of an already-authorised firm. The process takes 6 to 12 months. You must have professional indemnity insurance and meet minimum capital requirements.

  • Apply for FCA authorisation via the FCA Connect portal
  • Allow 6 to 12 months for your application to be processed
  • Get professional indemnity insurance – minimum £1,102,600 per claim
  • Hold at least £4,240 capital if you do not handle client money
  • Hold at least £10,000 capital if you handle client money
  • Provide customers with an Insurance Product Information Document (IPID)
  • Respond to complaints within 8 weeks and tell customers about the Ombudsman
  • Complete 15 hours of continuing professional development each year
  • Consider becoming an Appointed Representative instead of applying directly
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If you want to arrange, advise on, or assist with insurance contracts in the UK, you need FCA authorisation as an insurance intermediary. This includes insurance brokers, agents, and advisers.

The alternative is to become an Appointed Representative of an already-authorised firm, which has its own requirements.

Understanding insurance intermediary authorisation

Who needs authorisation?

You need FCA authorisation if you:

  • Advise customers on insurance products
  • Arrange insurance policies on behalf of customers
  • Assist in claims handling under policies
  • Introduce customers to insurers (unless exempt introducer)

You do not need authorisation if you're:

  • An Appointed Representative of an authorised firm
  • Making exempt introductions only (limited activities, no advice)
  • Administering insurance claims as the insurer's employee

Types of insurance permissions

Common permission combinations

  • General insurance broker - advising and arranging non-investment insurance
  • Life insurance adviser - advising on life policies (additional competency requirements)
  • Commercial broker - general insurance for business clients
  • Wholesale broker - reinsurance and Lloyd's market

Professional indemnity insurance (PII)

PII is mandatory for all FCA-authorised insurance intermediaries.

Getting adequate PII

  • Shop around - specialist insurance broker PII providers understand the market
  • Check exclusions - FCA has concerns about exclusions that undermine cover
  • Review annually - cover must be in place at all times
  • Notify FCA - if you cannot obtain adequate cover, tell FCA immediately

Capital requirements

Important: If you hold client money, you must have a client money trust arrangement (statutory or non-statutory) and meet additional capital requirements. Many brokers choose "risk transfer" arrangements where client money goes directly to the insurer to avoid these requirements.

Customer disclosure requirements

You must provide customers with specific information before they buy.

Getting disclosure right

  • First contact - disclose your status and who you act for
  • Before advice - explain basis of advice (fair analysis, limited panel, single insurer)
  • Fees and commission - disclose if you charge fees. Disclose commission to commercial clients on request
  • IPID - provide Insurance Product Information Document for non-life products
  • Durable medium - if disclosing orally, follow up in writing

Complaints and the Financial Ombudsman

Setting up complaints handling

  1. Appoint a complaints handler
  2. Create written complaints procedure
  3. Train staff on recognising and handling complaints
  4. Log all complaints
  5. Respond within 8 weeks maximum
  6. Include FOS referral rights in final responses
  7. Report complaints data to FCA

Appointed Representative arrangements

An alternative to direct authorisation is becoming an Appointed Representative (AR) of an already-authorised firm.

Is AR status right for you?

Benefits:

  • No FCA authorisation application needed
  • Principal provides compliance support
  • Can be faster to set up

Drawbacks:

  • Principal takes percentage of income or commission
  • Less independence - principal controls your activities
  • Principal's compliance failures affect you
  • Enhanced AR regime means more oversight from December 2022

Ongoing compliance requirements

Once authorised, you must:

  • SM&CR - comply with Senior Managers and Certification Regime
  • Consumer Duty - deliver good outcomes for customers
  • Financial crime - have AML and fraud prevention systems
  • CPD - 15 hours minimum per year for relevant staff
  • Reporting - submit regulatory returns via RegData
  • PII renewal - maintain adequate cover continuously
  • Capital maintenance - meet capital requirements at all times

Next steps

  1. Decide route - direct authorisation or Appointed Representative
  2. Determine permissions - what insurance activities will you conduct?
  3. Arrange PII - get quotes and secure cover
  4. Prepare application - business plan, governance, policies
  5. Apply via FCA Connect - submit application with fee
  6. Await determination - 6-12 months typical
  7. Set up systems - complaints handling, disclosures, record-keeping