The Financial Services Authority's (FSA) product intervention rules under consultation could drill down into the wholesale insurance market and give it expensive regulatory compliance demands, according to some legal opinion. Jeremy Irving, partner at Eversheds, said that the Financial Conduct Authority (FCA), in implementing the rules, could hold wholesale markets responsible for consumer mis-selling if they were linked in the chain as, say, product providers, reinsurers, or placing brokers.
"The extra compliance cost will be driven by the need for management to understand more about the business, and how it conducts itself. It adds to the level of understanding which is already needed for Solvency II," Irving said. "Solvency II requires, if nothing else, firms to understand the full range of risks they face."
Some lawyers were less convinced that the paper had such implications for wholesale insurance markets as part of the consumer chain.
Maria Ross, partner at Norton Rose,
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