Q&As

The business of effecting or carrying out contracts of insurance is subject to prior authorisation under the Financial Services and Markets Act 2000. There are some limited exemptions to this requirement, for example breakdown insurance which is covered by Article 12 of the Regulated Activities Order. (Q1) Whilst the provider of 'breakdown cover/insurance' could operate under an exemption from carrying out and effecting a contract of insurance (Article 12), would the product ('breakdown cover/insurance') be classified as an insurance product? If so, should the terms and conditions of the ''breakdown cover/insurance' contain FOS rights against the provider, FSCS details? (Q2) If the product is considered to be insurance, will an agent distributing this 'breakdown cover or insurance' be conducting insurance mediation activity and therefore should be appropriately authorised, or make use of the Art 12 exemption?

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Published on: 04 November 2015

You are correct that there is an exclusion for breakdown insurance under Article 12 of the Financial Services and Markets act 2000 (Regulated Activities) Order 2001, SI 2001/544 and it is not classified as a specified activity in certain circumstances. As the commentary from Halsbury's

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United Kingdom
Key definition:
Carry definition
What does Carry mean?

A cost (which includes an opportunity cost) or benefit that accrues over time. It might include for example the interest which is not received because the money was not left in the bank but invested in an investment.

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