COMPLIANCE NEWSLETTER - SEPTEMBER 2017

FCA’s first Policy Statement on the IDD imminent
The FCA is shortly expected to issue its first Policy Statement on ICOBS and certain other rule changes following its initial consultation (CP17/7) on the implementation of the Insurance Distribution Directive (IDD). The new rules, which will be set out in the Policy Statement, will come into force on 23 February 2018. In the meantime, the FCA has asked firms to continue to make preparations based on its draft rules.

To read the original consultation document, which includes the FCA’s draft rule changes, click here.

FCA consults on other aspects of the IDD
A second consultation paper, CP17/23, on the implementation of the IDD has been published by the FCA. This includes proposed rule changes on product oversight and governance, updated requirements relating to the good repute of employees and the introduction of the Insurance Product Information Document (IPID) for most types of consumer insurance business.

The consultation period ends on 20 October 2017 and a Policy Statement is expected in December 2017.

For more information, click here.

SMCR consultation underway
The FCA has issued CP17/25, the first of two consultation papers on its proposals to extend the Senior Managers & Certification Regime (SMCR) to all its authorised firms. The new regime, which already applies to banks and to a limited extent to insurers, will replace the current Approved Persons’ regime from a date to be agreed, probably in late 2018.

The first consultation period ends on 3 November 2017. A further consultation paper, which is expected to provide details of how the SMCR will apply to Appointed Representative firms, is expected this autumn.

For more information, click here.

EIOPA publication on ‘delegated acts’
The European Insurance and Occupational Pensions Authority (EIOPA) has published draft delegated regulations for consultation by the European Commission. The FCA will be considering these in advance of its third consultation paper on the IDD, but has asked firms to read this EIOPA publication in conjunction with its second IDD consultation paper in the meantime.

The EIOPA publication covers the responsibilities of ‘product manufacturers’, which would include MGAs and other intermediaries where they have a decision-making role in the design and development of a product. New responsibilities are also to be placed on product distributors, including requirements to make sure they understand the product, the target market and any customers for whom the product is not compatible.

For more information, click here.

GDPR round-up
The government has published a Data Protection Bill, which will bring the EU General Data Protection Regulation (GDPR) into UK law. The GDPR comes into effect across all EU states from 25 May 2018.

For more information, click here.

Increasing press coverage of the GDPR has prompted the Information Commissioner’s Office (ICO) to publish a number of blogs to dispel what it sees as common myths.

To read the blogs, click here.

The European Commission has launched an ‘infographics’ website aimed at helping small to medium-sized businesses understand data protection principles, why the regulations are changing next May, and what businesses need to do.

For more information, click here.

Court of Appeal rules on the meaning of ‘consumer’ in insurance
A recent court case, Mohammed Ashfaq v International Insurance Company of Hannover plc, has provided guidance on how to establish whether an individual is acting as a consumer when taking out an insurance policy.

The Court of Appeal held that it was clear that the purpose of the policy in question was related to the insured's trade, being the letting of his property to students for rent. Reference was made to previous case law in which it was held that a party will be acting for purposes outside his trade, business or profession "if, and only if, the purpose is to satisfy the individual's own needs in terms of private consumption" and the business purposes are "negligible or insignificant".

For more information, click here.

FOS publishes six-monthly complaints data at individual firm level
Data published by the Financial Ombudsman Service (FOS) show that the Ombudsman took on a total of around 170,000 new cases in the first six months of this year, an increase of 13% on the previous six months. Nearly two-thirds of the complaints FOS received in the current period emanated from just 10 firms, and the volume of complaints has risen in almost every product sector. A table of the financial services firms and complaints numbers is provided.

For more information, click here.

Price comparison site fined for sending unsolicited emails
The Information Commissioner’s Office has fined MoneySuperMarket £80,000 for sending 7.1 million marketing emails to customers who had previously opted-out of receiving such communications. Although sent under the guise of ‘customer service’ communications, the emails were deemed to be marketing communications and therefore constituted a breach of the Privacy and Electronic Communications Regulations (PECR).

For more information, click here.

FCA ‘Live and Local’ event programme re-starts
The FCA is holding a series of two-hour interactive workshops in various parts of the country, which will encompass issues arising from the Insurance Distribution Directive, complaints, and the Senior Managers and Certification Regime.

Conscious of the amount of regulatory change firms are facing, the FCA is also hosting separate 90-minute ‘Q&A roundtable’ events, alongside an industry expert, where firms can pose questions, provide feedback or challenge in an open and informal setting.

Lastly, the regulator is planning to hold a presentation this autumn in London for Lloyd’s and London Market firms, to cover key issues in that area of the market. Further details will be made available later in September 2017.

For more information on all the above events, click here.

FCA forces insurer to improve transparency of its policy wording
London General Insurance Company Limited was recently required to give an undertaking to the FCA to make a term in one of its policies more transparent. The regulator considered that the wording was not written in ‘plain and intelligible language’ and was therefore in breach of the Consumer Rights Act 2015. The FCA has powers to challenge unfair terms in financial services consumer contracts.

For more information, click here.

Approved Person fined for compliance oversight failings
The FCA has issued an Approved Person within a financial services firm a fine of £75,000 for failing to exercise due skill, care and diligence in his role as compliance oversight officer at two companies.

For more information, click here.

FCA issues Finalised Guidance on Politically Exposed Persons
The regulator has published Finalised Guidance FG17/6 on the treatment of politically-exposed persons (PEPs) for anti-money laundering purposes. The guidance states that the risk associated with PEPs must be assessed on a case-by-case basis and sets out the approach the FCA expects firms to take.

For more information, click here.

The information provided in this Newsletter is based on the Managing General Agents’ Association’s knowledge and understanding of regulatory issues at the date of publication. However, it is generic in content, and matters in UK regulation change regularly. Members should take their own professional advice in connection with any issues which could affect their business. The Managing General Agents’ Association accepts no responsibility or liability for any actions taken based on the information contained within this Newsletter.