Context
The FCA has set out further proposals for simplifying insurance and funeral plan requirements in a new Consultation Paper, CP26/22. The FCA is asking for comments on this Consultation by 4 September 2026. These proposals are part of the FCA’s wider plans to streamline rules and reduce complexity for firms following the introduction of the Consumer Duty, and follow final rules published in December 2025. Alongside this consultation, the FCA is consulting on the application of the Consumer Duty to business with non-UK customers (see above). The FCA has taken a consistent approach to disapplying ICOBS and PROD 4 with disapplying the Duty.
The FCA suggests that insurance and / or funeral planning firms should read this Consultation alongside:
- CP26/23: Consumer Duty – Scope and proportionality in wholesale markets (see above) – insurers and insurance intermediaries working with other firms to manufacture products or services, with a role in the distribution chain, or conducting retail business for retail customers outside the UK;
- PS25/21: Simplifying the insurance rules (PDF) – insurers and insurance intermediaries, and funeral plan firms;
- Handbook Notice No. 142 (see below) and CP25/37: Targeted clarifications of Handbook materials – firms providing payment protection insurance or packaged bank accounts, all insurance firms that submit value measures and pricing practices data, and funeral plan firms should read the finalised rules, including insurance rules, covering:
- Removing specific rules for PPI and packaged bank accounts.Deleting product governance rules.Pricing practices and value measures reporting.
- Removing the minimum 12-month product review for funeral plans.
Most of the insurance rules came into force on 26 June 2026, with the remainder coming into force on 27 July 2026.
- CP25/36: Client categorisation and conflicts of interest – insurers and insurance intermediaries – chapter 4 contained proposals to rationalise rules on conflict of interests under SYSC 10. Final rules and guidance expected in Q4 2026.
Key points to note and next actions
In this Consultation, the FCA is proposing the following measures:
Narrowing the scope of FCA rules for non-UK business:
- Amending the territorial application scope of the Insurance Conduct of Business Sourcebook (ICOBS) and the Product Intervention and Governance Sourcebook, chapter 4 (PROD 4). The detailed insurance conduct requirements would apply where there is a clear UK connection, based on the customer’s habitual residence and, where relevant, the location of the risk. This would reduce duplication and potential conflict with overseas regulation. High-level requirements (such as the Principles for Business in PRIN (other than the Consumer Duty) and the Senior Manager Arrangements, Systems and Controls sourcebook (SYSC) rules) will maintain appropriate consumer protections.
Removing unnecessary disclosure requirements:
- Removing certain duplicative or low-value disclosure requirements across ICOBS that don’t meaningfully help customers make choices (e.g., the firm’s postal address; whether a firm is an insurance undertaking or an intermediary; whether the intermediary holds (directly or indirectly) 10% or more of the voting rights or capital in an insurance undertaking, or is acting on behalf of the customer or on behalf of the insurer, or is contractually obliged to place business exclusively with one or more insurance undertakings (and, if so, name them); the nature and basis of remuneration; and the additional ‘pure protection’ disclosure requirements in ICOBS 4.2).
Increasing flexibility in means of disclosure:
- Giving firms greater flexibility in how disclosures are provided to customers, including increased use of digital channels. Firms must still provide required information in a durable medium appropriate to customer needs and way the product is distributed. Firms must continue to provide information on paper at the customer’s request.
Simplifying rules for advised sales of insurance products:
- Simplifying the rules that apply when insurance is sold with advice by removing references to ‘advice’ that do not involve a personal recommendation. This leaves a clearer distinction between sales involving a personal recommendation and those that do not.
Amending rules for professional indemnity insurance (PII):
- Amending the currency denomination of minimum PII levels for insurance intermediaries from euros to Pounds Sterling at an appropriate conversion rate, without reviewing or changing the underlying minimum levels.