Regulatory
1 August 2017
Each one of our clients is different. Different aims, purpose, activities and situations make each organisation unique. But when it comes to insurance the Financial Conduct Authority (FCA) have only two classifications: ‘consumer’ or ‘commercial’ customers.
The FCA’s Insurance Conduct of Business Sourcebook states: “A consumer is any natural person who is acting for purposes which are outside his trade or profession. A commercial customer is a customer who is not a consumer.”
Put simply if you are purchasing insurance for yourself or your family (typically home, travel and personal motor insurance) you’ll be classed as a consumer. One question we are often asked is about property bought to be let out. In this instance the individual would be considered a commercial customer because the property has been bought as a commercial venture.
Regardless of whether an organisation is for-profit or non-profit they’ll be classed as a commercial customer for insurance purposes. This includes unincorporated groups and clubs, registered charities, CICs, limited by guarantee companies, CIOs and social enterprises. The Insurance Act 2015 confers more onerous duties on commercial customers. If you are classed as a commercial customer you should ensure you are aware of these.
What type of customer are you? If you need help determining which classification applies and what this means for you speak with your broker who can provide the advice and guidance you need.
