HM Treasury has published a consultation paper1 on the transposition of the Insurance Distribution Directive (IDD), which will repeal and replace the Insurance Mediation Directive. The consultation seeks views on the government’s proposals for amending legislation to effect the implementation of the IDD and on the draft statutory instrument which will effect the transposition.

Broadly speaking, the questions on which HM Treasury is consulting relate to:

  • The regulation of products sold as add-ons.
  • The exemption for “connected contracts” (i.e. insurance products which are sold as add-ons to a firm’s principal goods or service).
  • Whether motor warranties which are contracts of insurance should continue to be subject to regulation.
  • The extent to which the mere provision of information should be regulated.
  • Whether the draft statutory instrument adequately implements certain powers and functions of the regulators.

As with Solvency II, the IDD will be enacted by a combination of statutory instruments and FCA rules. On 6 March, the FCA published its first consultation2 on rules transposing the IDD. The FCA’s first consultation focuses on:

  • The application of the IDD.
  • Professional and organisational requirements.
  • Complaints handling and redress.
  • Changes to conduct of business rules for non-investment insurance contracts.
  • The regulatory regime for companies whose distribution of insurance products is ancillary to their main business.

The FCA’s second consultation paper will be published later this year. The second consultation will focus on conduct of business rules for life insurance and on areas which are still subject to further work by EIOPA and the European Commission.

HM Treasury has stated that the government intends to make the draft legislation later in 2017. Taking into account the consultation periods of the HM Treasury and the two FCA consultations (the first of which closes on 5 June), time for HM Treasury and the FCA to consider the responses and make necessary amendments, and the summer holidays, it seems unlikely that we will see a final statutory instrument until the autumn and we may not see final FCA rules until the winter or even early 2018.