Insurance Mediation Directive Exemption for Freight Forwarders
 
The Insurance Mediation Directive Exemption for Freight Forwarders has now come into force so those that wish to offer insurance should be able to obtain an open cover policy without the need for FSA registration. Members who are not currently authorised and who can comply with the conditions of the exemption will be able to resume the provision of insurance.

There is an exemption for freight forwarders and storage firms where such a firm holds an open cover insurance policy in respect of loss or damage to goods which it transports or stores (or for which it arranges the transportation or storage) and makes available to customers' rights under that policy such that the customer is able to claim directly against the insurer. The exemption only applies where the customer is not an individual.

Members who are currently authorised by the FSA will continue to be authorised and liable for FSA fees unless they apply to cancel their authorisation. Members must apply to cancel using the cancellation form obtainable from the FSA's website

(www.fsa.gov.uk ). In order not to be charged fees for the current year, members must complete this process within 6 weeks of the date when the SI came into force and give their reason for cancellation as "Freight Forwarder no longer subject to regulation following SI 2007/1821." The SI came into force on 20 July so the six week period ends on 31 August 2007. Firms which fail to identify themselves as cancelling because of the change in regulation or which apply more than 6 weeks after the date when the SI came into force will be charged a full year's fees in line with the FSA's fees rules. The FSA will not contact firms individually (though it will issue some general guidance) so it is up to your firm to ensure that it applies to cancel within the above timeframe.

Those companies wishing to continue to be authorised by the FSA may of course do so. If you have any doubt whether you need to be authorised you should take independent legal advice.

FSA registered members who decide to cancel their authorisation and who do so within the timeframe described above will not be required to renew or pay any fees to cover the period after 1st April 2007.

This exemption will initially only apply to the provision of insurance to commercial customers. It will not apply where a freight forwarder or storage firm is doing such business with a private individual and authorisation will still be required in these circumstances.

BIFA is discussing the establishment of a Consumer Code of Practice, which, subject to the approval of Ministers, could extend the exemption to the retail customer at a later date. Members will be advised of any changes if and when they occur.

Contact Robert Keen ( r.keen@bifa.org ) at the BIFA Secretariat for any further information you may require.