TT Talk - UK - Deregulation of Freight forwarding insurance
- Date: 24/03/2009
- Source: TT Talk 117
‘In this newsletter we examine the result of the Government’s consultation in respect of the deregulation of freight forwarding, removal and self-storage insurance.
The deregulation of this type of insurance is expected to come into effect from
Following representations made to the Government by the freight forwarding industry initiated by concerns that other EU Member States were not regulating freight forwarders’ insurance activities and the consequent effect regulation was having on the industry’s competitiveness, the Government announced its intention in late 2006 to exempt the insurance activities of freight forwarders from regulation by the Financial Services Authority (‘
As a result of this move, the practice of freight forwarders and storage firms extending ‘open cover’ insurance to commercial customers was the subject of a 2007 statutory instrument. Retail ‘open cover’ was not deregulated at the time however because of the perceived risk of consumer detriment.
This further deregulation follows HM Treasury’s consultation on the topic which was launched on 19 June 2008 and closed on 12 September 2008. HM Treasury published their report this month.
6 April 2009. FSA’).
The consultation document outlined three options ranging from no change to the status quo, to the Government’s favoured option whereby it would remove from the scope of FSA regulation the practice of freight forwarders and storage firms extending ‘open cover’ insurance policies to include the goods of retail customers in exchange for a premium. HM Treasury and the FSA would also work with the relevant trade associations to ensure that they had in place suitable
The consultation document made it clear that the third option was the Government’s preferred option because it believed there would be a net benefit for industry and consumers.
The responses received from the industry were universally in favour of this option, some with additional proposals as to how it might best be implemented.
codes of practice that would minimise consumer detriment, this to include joining the Voluntary Jurisdiction of the Financial Ombudsman Service.
Cancellation of permission
As a result of this deregulation, if your firm is authorised to transact open cover freight forwarding and storage business and does not transact any other regulated activities, you must apply to the FSA to cancel your permission before
The FSA make it clear that if a cancellation application is received after 31 March 2009, the firm will be liable for the full year’s fee. They also note that it is important that the firm identifies itself as a freight forwarder and/or storage firm on the cancellation form by ticking box (i) and indicate ‘Freight Forwarder’ under question 4, page 4.
A link to the cancellation form is here:
31 March 2009 to avoid paying full fees for 2009/10. You will then be able to conduct regulated business until 6 April 2009 and not be liable for the full fees for 2009/10.