The Consumer Panel today warned the FSA that it must make consumers better aware that some general insurance will not be covered in full by the FSA regulation which starts this weekend. There are two important omissions:

• Firms still awaiting a final decision from the FSA are to be granted interim authorisation. Consumers who buy insurance through these companies will not be entitled to compensation if they lose money through the company going out of business. Moreover, such firms are required to tell consumers they are only "interim" authorised, but there are no words specified by the FSA. Thus consumers may not realise that they are doing business with such a company and that they are therefore not eligible for compensation.

• If people buy travel insurance through a travel agent when they book a holiday, this will not be covered by FSA regulation. So consumers will not have access either to the Financial Ombudsman Scheme, or the Financial Services Compensation Scheme should the firm subsequently close.

Ann Foster, Chairman of the Consumer Panel said:

"There are major gaps and inconsistencies in the new general insurance regulation, which will not be clear to individual consumers. Everyone needs to be aware that they will not get the full protection of FSA regulation when they buy through an interim authorised company or from a travel agent. The FSA must tell consumers to check all the details before they buy."

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