The Financial Services and Markets Act 2000 (Motor Insurance) Regulations 2007

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Financial Services and Markets Act 2000 (c. 8) (the “Act”) and the Financial Services and Markets Act 2000 (Law Applicable to Contracts of Insurance) Regulations 2001 (SI 2001/2635) (the “2001 Regulations”) to change the meaning of “EEA State in which a risk is situated” in certain circumstances in the context of vehicle insurance.

The Regulations implement Article 4a(1) of Council Directive 1990/232/EEC of 14th May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (OJ No L 129, 19.5.1990, p. 33) (the “Third Motor Insurance Directive”) which was inserted into the Directive by Article 4(4) of Directive 2005/14/EC of 11th May 2005 of the European Parliament and of the Council (OJ No L149, 11.6.2005, p. 14).

Regulation 2 inserts a new sub-paragraph into paragraph 6 of Schedule 12 to the Act to provide for circumstances in which, for the purposes of insurance business transfer schemes where the insurance relates to a vehicle of any type, a reference to the EEA State in which a risk is situated is a reference to the EEA State of destination of the vehicle on, and for a period following, acceptance of delivery by the purchaser.

Regulation 3 inserts a new paragraph into regulation 2 of the 2001 Regulations which specify the law that applies to contracts of insurance, the effecting or carrying out of which constitutes a regulated activity within the meaning of the Act. The paragraph inserted provides for circumstances in which where the risk is covered by a contract of insurance and the insurance relates to a vehicle of any type, a reference to the EEA State in which a risk is situated is a reference to the EEA State of destination of the vehicle on, and for a period following, acceptance of delivery by the purchaser.

As these Regulations implement, in part, the Third Motor Insurance Directive, as amended by the Fifth Motor Insurance Directive, the Transposition Note setting out how the Government transposed in to UK law the main elements of the Fifth Motor Insurance Directive has been amended to reflect this further element of transposition. The amended Transposition Note is available in both Houses of Parliament. Copies are also available from the following address/website:

http://www.hm-treasury.gov.uk/consultations_and_legislation/implementing_fifth_motorinsurance_directive/consult_fifth_motorinsurance_directive.cfm

A full regulatory impact assessment of the effect that this instrument will have on the costs of business is annexed to the Explanatory Memorandum which is available alongside this Order on the OPSI website.