| Link(s): | CP23/19: Future Regulatory Framework – The Insurance Distribution Directive | FCA CP23/19: Future Regulatory Framework The Insurance Distribution Directive (fca.org.uk) |
Context
The UK fully implemented the Insurance Distribution Directive (IDD) in 2018. Most of this was done through changes to the rules, although some requirements were contained in EU delegated regulations which were, at the time, directly applicable. These are part of retained EU law (REUL) following the UK’s exit from the EU. Retained EU law is being brought into the Handbook to maintain the existing regulatory requirements.
Key points to note
The Treasury has announced its plan to repeal Insurance Distribution Directive (IDD) delegated acts, with the requirements of the regulations to be included in the FCA’s Handbook. So, the FCA is consulting on changes to various sourcebooks intended to replace the provisions of the retained EU law being repealed.
The IDD delegated regulations provide important detailed requirements on firms which supplement the obligations from the IDD itself. For example:
- The regulation on product oversight and governance sets out detailed ways in which insurance manufacturers must ensure their products meet the needs of customers within the target market.
- The regulation on the insurance product information document (IPID) sets out the format and content of the IPID document, to ensure consistency and comparability.
Once these parts of the REUL are repealed, these requirements will cease to apply directly to firms. At this stage, the aim of the FCA is to maintain these requirements by including them as rules to ensure the regulatory regime remains as it is now. It is not intending to introduce any new requirements on firms as part of the proposals, nor is it intending to remove any existing requirements. This approach is considered to be the most appropriate way to maintain consumer protection and regulatory standards.
The FCA will continue to consider whether further, more substantial changes are required to the rules in order to deliver an appropriate regulatory regime in the future.
The FCA is seeking feedback on these proposals by 9 October 2023.
Once the consultation has ended, the feedback will be considered before the final rules are published, which will be in line with the Government’s timetable to repeal the legislation.
Next actions
None – for information and awareness.