Context
In early September, the FCA published a Consultation Paper CP23/19, in which it outlined plans to replace retained EU provisions in the ICOBS Sourcebook with Handbook Rules and Guidance. This was covered in our weekly update for the week ending 8 September 2023. The FCA has now published the relevant Policy Statement PS23/18.
The FCA’s aim 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.
Key points to note and next actions
- Having reviewed the Rules and Guidance, there are no material changes, with some minor amends and some occasional wording added for clarification.
- Most of the changes are to replace certain words and terms with the defined term version of the words (so the same words, just in green italics with the link to the glossary definition) and using the word ‘firms’, and ‘it’, and ‘must’ instead of ‘shall’.
- The new Rules and Guidance will take effect from 5 April 2024
In relation to ICOBS changes, the only amends are to the tables at ICOBS 6 Annex 3 R – providing product information by way of a standardised insurance information document (IPID). Four new items of guidance have been included in relation to the IPID:
- Section 2 – item 2.3A G – firms are reminded that the IPID must be provided for each individual policy. This is regardless of whether that policy is sold on its own, in connection with another policy or in connection with other goods and services.
- Section 3 – item 3.4A R – any information about optional covers must not be preceded by ticks, crosses or exclamation marks.
- Section 3 – item 3.8A G – firms are reminded that the IPID forms a part of the appropriate information about a policy a firm must give a consumer so that the consumer can make an informed decision about the arrangements proposed (see ICOBS 6.1.5R). The IPID only focuses on the key information that the consumer will always need to make an informed decision.
These two highlighted elements might indicate the FCA’s view that, for example, an IPID alone might well not be ‘sufficient’ product information to give to a customer to make an informed decision. We have seen queries where we are asked if firms need to send a full product wording pre-contract. The IPID is “part” of the appropriate information, but “only focuses on the key information” – so it is not necessarily all the information that a customer might need to make an informed decision.
- Section 3 – item 3.9A R – the use of sub-headings is permitted, where necessary.
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.