On 4 December 2018, the FCA published a new webpage on delivering clear, fair outcomes for consumers from the insurance sector under the Insurance Distribution Directive (IDD).
The IDD replaced the Insurance Mediation Directive on 1 October 2018. As a result, the FCA has a number of requirements in its Handbook which apply to firms distributing insurance.
The FCA expects firms to have already adapted their processes to meet the IDD requirements, but calls on them to continue considering how they can improve outcomes for their customers. The FCA says that it is taking a keen interest in the way firms are applying the IDD-related rules. The webpage, sets out some important areas which the FCA expects firms to have considered in relation to the rules and around which it focuses its supervision.
The FCA has previously published details of the difficulties firms found in complying with its renewal transparency rules, where it saw issues such as publishing the incorrect previous year’s premium on renewal notices, or failing to display key information clearly. The FCA expects firms to have learned lessons from this, and to apply these when approaching regulatory change. Firms should place sufficient focus on systems, controls and resources to meet requirements. They should also ensure that accountability for responding to the changes and requirements is clearly allocated to appropriate individuals.
The FCA says that as part of its implementation of the IDD, it has introduced several changes to its rules which further define regulation and consumer protection in the insurance sector, including requirements to:
- identify customers’ insurance demands and needs, and ensure that products offered are consistent with them;
- have in place product oversight and governance arrangements;
- adhere to the customer’s best interests rule.
The FCA concludes the webpage by saying that the effective implementation of the IDD and its new rules by firms forms an important part of its focus on firms adopting a customer-centric culture. FCA supervision teams have been highlighting its significance when engaging with firms in recent months, and will continue to focus on how firms are complying with the new rules in a way that properly considers their customers.