| Link(s): | IUA gives qualified welcome to Consumer Duty rule changes – IUA CP26/23: Consumer Duty – scope and proportionality |
Context
For several years the insurance industry has argued that the FCA’s rules should not apply to non-UK business and a proposal from the FCA to limit the international scope of the Consumer Duty regulations is seen as a positive development by the IUA.
Key points to note and next actions
The IUA said the reforms would enable insurers to apply local regulatory rules where products are distributed, rather than having to comply with both FCA and local requirements.
The IUA also welcomed FCA efforts to clarify how Consumer Duty should be applied proportionately. However, it expressed concern that insurers may not fully benefit from the reforms because equivalent changes have not been proposed for insurance-specific product governance rules. The association argues that firms such as brokers and managing general agents are often best placed to conduct fair value assessments, and that accountability should be allocated according to each party’s role in the distribution chain.
It further challenged FCA proposals to remove certain remuneration disclosure requirements, warning that reduced transparency could disadvantage customers and increase the risk of undisclosed commission or fee arrangements. The IUA has called for continued disclosure obligations to help ensure customer transparency and maintain confidence in insurance distribution practices.