FSCP worried about IDD: FSCP has published a position paper on its concerns about the recast Insurance Mediation Directive (now known as the Insurance Distribution Directive (IDD)). Its main worries are:

  • that too many ancillary intermediaries would be exempt from all provisions of the Directive. It supports the Council's suggestion that all intermediaries should at the very least comply with basic rules on information, conduct of business and complaints procedures;
  • that, as the IDD is a minimum harmonisation directive, this will lead to regulatory arbitrage when intermediaries passport. It says protections should apply such that an intermediary principally active in one Member State market which is not its home state should be supervised as if that Member State were its home state;
  • that the original proposal that decisions of alternative dispute resolution mechanisms (in the UK, the Financial Ombudsman Service) would not be binding on consumers. It notes that both the European Parliament and Council have addressed this concern;
  • that the proposal should ban certain "toxic" types of commission and require all commission to be disclosed. At the very least, the proposals should align with the revised Markets in Financial Instruments Directive (MiFID 2);
  • the Council's decision to remove the provision banning tying of products. It says there is no justification for forcing consumers to purchase a package or nothing at all;
  • the removal of the proposed commission ban and inducements for independent intermediaries when selling insurance-based investment products. This makes the proposal inconsistent with MiFID 2. It queries whether the UK would be allowed to gold-plate the current provisions to maintain its current position under the Retail Distribution Review rules; and
  • that the provisions on the execution-only sale of non-complex products do not align with MiFID 2.

(Source: FSCP Worried About IDD)