There is a six-part structure to FSA regulation of the sale of insurance: 1. Astatutory prohibition on the carrying out of (widely defined) regulated activities without authorisation or exemption - section 19 of FSMA. This is known as the general prohibition.

2. A statutory instrument: the Regulated Activities Order (RAO) or, to give it its full title, The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 SI 2001/544. The RAO sets out numerous exclusions - which, subject to conditions, narrow the scope of regulated activities.

3. Extensive (perimeter) guidance in PERG, a regulatory guide.

4. Severe statutory sanctions for carrying out regulated activities without authorisation. Breach of the general prohibition is a criminal offence. The penalties can include imprisonment. (See ‘What happens when FSMAor the rules are broken?' below.)

5. Detailed FSA rules for authorised firms carrying out regulated activities. These include rules generally applicable to all authorised firms and also specific rules relating to conduct of business.

6. FSA investigation of and disciplinary action for authorised firms that breach FSA rules in the carrying out of regulated activities. Guidance on the FSA's approach to exercising its main enforcement powers is set out in the Enforcement Guide, EG. (Again see ‘What happens when FSMA or the rules are broken?' below.)

Running alongside the general prohibition concerning regulated activities is a parallel regime governing financial promotions, ie the promotion of financial products, including insurance. There is a financial promotion restriction in section 21 of FSMA, and the consequences of breaching it are similar to those for contravention of the general prohibition.

Any individual or entity wishing to make or approve a financial promotion needs to be FSA authorised. In practice, a firm that is not authorised is unlikely to apply to the FSA solely to make financial promotions; a better route in such circumstances may be to arrange for the financial promotion to be approved by an authorised person, an option permissible under section 21.