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Year of fear for GI clients

General insurance customers could be left without access to the Financial Services Compensation Scheme because of a backlog of processing of interim-authorised firms.

Applications to the FSA from 941 firms were waiting to be processed when GI became regulated on January 14 and the firms were given interim authorisation. Until the firms have full authorisation, clients buying policies will not have recourse to the FSCS although they would be able to use the FOS.

FSA spokesman Robin Gordon-Walker says it would be inappropriate for these clients to have access to the compensation scheme as other insurance companies paying into the scheme would feel aggrieved about having to bail out firms with interim authorisation.

He says the FSA is two-thirds of the way through the backlog although he would not give figures on rejections and appeals. The FSA has set a deadline of next January to complete any appeals.

Lobbyist firm Cicero account director Mark Twigg says: “Do all customers read and understand the material that firms provide? We knew these rules were coming in for a long time and the FSA should have been on top of it. Now there is up to a year of customer uncertainty and the potential for uncovered complaints.”

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