The Financial Conduct Authority (FCA) has published two consultation papers (CP17/23) on proposed changes to the FCA Handbook, whereby the Insurance Distribution Directive (IDD) will repeal the Insurance Mediation Directive (IMD), and will be implemented by insurance and reinsurance distributors by the 23 February 2018.
The process of converting the IDD into UK domestic law will take effect by virtue of the Financial Services Authority’s rules, as well as amendments to the Financial Services and Markets Act 2000 (FSMA) and the FSMA (Regulated Activities) Order 2001 (RAO). The FCA proposes a number of changes to its rules for life insurance businesses in order to implement IDD obligations, including information provision requirements and additional requirements related to the distribution of insurance-based investment products. The paper also includes proposed changes to the FCA’s rules for life and non-investment insurance businesses, including provisions for product oversight and governance as well as professional and organisational requirements.
Moving forward, firms need to assess what changes need to be made, if any, to their internal processes. The enforcement of professional and organisational requirements requires thinking around any staff training that is needed. Firms should also consider the need to evidence their work to the regulator and the Directive’s impact on other conduct of business rules and complaint handling processes. In the coming years, the Directive will provide greater flexibility and security by building upon each firm’s general obligations to its clients.