| Link(s): | CP25/36: Client categorisation and conflicts of interest | FCA CP25/36: Simplifying client categorisation and conflicts of interest rules |
Context
The FCA has published Consultation Paper CP25/36, which will partly be of interest to insurance intermediaries and insurers conducting insurance distribution activity (the conflicts of interest elements). The client categorisation rules elements seek to reset how firms distinguish between retail and professional clients, which will not impact our clients (in this context, the differentiation between retail and professional requirements will not be relevant to insurance distribution, consumer credit or funeral planning firms).
Key points to note and next actions
In relation to conflicts of interest:
- Over time, the FCA’s conflicts of interest rules, which apply to almost all authorised firms, have become overly complex to navigate.
- By reducing the length and complexity of the current rules, the FCA is seeking to ensure that its rules are proportionate and clear for firms to interpret and implement.
The Conflicts of Interest proposals:
- The FCA is proposing to rationalise the rules in SYSC 10 and SYSC 3, because the various conflicts of interest rules applicable to different types of firms are substantively similar and their overarching intention is the same.
- The FCA is proposing to rationalise SYSC 10 by removing minor unnecessary distinctions between rules that currently apply to different types of activity, without changing the current scope or application of the rules for firms.
- A table setting out which rules the FCA is proposing to merge has been provided in Annex 4 of the Consultation to help firms compare current rules to the proposed new rules and identify differences.
- There is no significant impact for general insurance intermediaries, other than the general application of SYSC 10 being clarified and simplified, and less content in the Handbook to navigate.
The FCA is asking for comments on this Consultation Paper by 2 February 2026.