EU excludes forwarders from financial services ruling

UK keen to follow suit JOY ORLEK AS THE local freight forwarding industry comes to terms with the implications of recent FAIS legislation, developments in the European Union provide an interesting perspective. While FAIS has “adopted” the UK’s Financial Services Authority regulations, it now transpires that EU countries have rejected the classification of freight operators as FSPs (Financial Service Providers), with the UK keen to follow suit. The British International Freight Association (BIFA)confirms that freight forwarders who insure their customers’ goods on open cover policies may not fall within the scope of the directive and therefore may not need to register with the FSA. Bifa general manager Robert Keen told FTW: “We have been concentrating on gathering evidence from other EU states on how the legislation is being handled there. “Based on preliminary evidence, the UK is alone in designating forwarders as having to comply with the Insurance Mediation Directive. Other states seem to be excluding their forwarding and transport sectors.” Bifa has been lobbying the appropriate Treasury officials (who will be meeting their counterparts shortly) to take heed of what is happening in Europe. “To be gloomy there is a downside in that the UK may attempt to convince the other states that they should adopt the UK approach to interpretation of the legislation,” said Keen. “Quite honestly freight operators have never been known to offer insurance advice - their brokers do,” says Eikos MD Victor Vaz. “They also disburse insurance premiums, in addition to customs duties, freight, wharfage, etc. and thereafter collect these amounts from their clients. In other words they don’t hold customers’ premium, they finance it! “Last, but not least, the submission of claims by freight operators has for many years been restricted to pro-forma claims against potentially liable carriers. We can only hope that the introduction of FAIS does not dissuade freight operators from offering this worthwhile service. Neither the cargo owner nor his broker or insurer are in a position to do so timeously as they are “distant” from the supply chain and therefore not in a position to initiate such procedures within the required time frames.”