Play by the rules

Social housing providers are increasingly promoting financial inclusion to their residents. The most popular types of financial products and services being offered are contents insurance and banking facilities. But many providers are nervous about falling foul of Financial Services Authority regulation.

The FSA has produced guidance to explain which products are regulated and which are exempt. Although the government plans for the Bank of England to take over the FSA’s responsibilities, it has not indicated it wishes to make major changes to the regulations underlying this guidance. The guidance describes how to advise on, arrange and promote certain financial products, without needing to be regulated. If providers step out of line, the consequences can be serious - criminal sanctions and unenforceable contracts, not to mention negative publicity.

Providers can arrange contents insurance for their residents and recommend particular insurance products without obtaining FSA authorisation. But these exemptions only extend to arm’s-length organisations if they do this for free.

Social landlords can also arrange and advise on savings schemes, such as bank accounts for residents, as long as the account is held with the bank or building society and not the housing provider itself. But advising on or arranging other financial products may be regulated.

Providers can encourage residents to consider a specific contents insurance product or deposit account face-to-face or over the phone or by sending brochures produced by the insurer/broker or bank/building society. But be careful about any other written promotion.

Miguel Pereira, partner, Lewis Silkin
miguel.pereira@lewissilkin.com

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