COMPLIANCE NEWSLETTER - July 2018

Implementation date for SM&CR announced

HM Treasury has confirmed that the Senior Managers & Certification Regime (SM&CR) will apply to solo-regulated firms (i.e. firms only regulated by the FCA) from 9 December 2019. In addition, the FCA published near-final rules for the regime in Policy Statement PS18/14, which are not expected to change significantly. Alongside that, it has also published PS18/16, which details how the Duty of Responsibility will apply, together with a 'Guide for FCA solo-regulated firms' which summarises its SM&CR rules and guidance.

FIND OUT MORE

FCA consults on setting up a new public directory

The FCA has published a Consultation Paper (CP18/19) in which it proposes to launch a new public directory of 'relevant individuals' working in the financial services industry. This will complement the existing Financial Services Register by including individuals who fall under the Certification Regime of the SM&CR, as well as non-executive directors who fall outside the scope of the new regime. The directory is to be populated by individual firms directly through the 'Connect' system.

FIND OUT MORE

Minimum PI insurance limits under IDD increased

The European Insurance and Occupational Pensions Authority (EIOPA) has advised that the minimum professional indemnity insurance limits for intermediaries under the Insurance Distribution Directive (IDD) are increased for inflation. They are raised from EUR 1,250,000 to EUR 1,300,380 per claim, and from EUR 1,850,000 to EUR 1,924,560 in the aggregate. The minimum limits will be reviewed again by EIOPA in five years' time.

FIND OUT MORE

FCA workshops on SM&CR and IDD implementation

The FCA is holding interactive workshops to help firms better understand the extension of the Senior Managers & Certification Regime (SM&CR) and the implementation of the Insurance Distribution Directive (IDD). The workshops will use real-life examples and case studies, to help demonstrate the FCA's expectations. Firms can register via the FCA's 'Live and Local' web page.

FIND OUT MORE

PRA expresses concerns over sustainability of insurers' business models

The Prudential Regulation Authority (PRA) has written a 'Dear CEO' letter to specialist general insurers pointing out that the prudential risks associated with a long-standing soft market and increasing diversification away from areas of traditional underwriting expertise are starting to crystallise. It expects boards of insurers to be reviewing their business models, including their controls around delegated authority arrangements.

FIND OUT MORE

FCA seeking to improve access to travel insurance for consumers with medical conditions

The FCA has issued a Feedback Statement (FS18/1) following its 'call for input' on the issues facing consumers with pre-existing medical conditions (in particular, cancer) when buying travel insurance. The regulator has decided that a new 'signposting' service to specialist providers should be implemented. A series of 'FCA Roundtable' events will take place this summer to gather further input from stakeholders, including insurance intermediaries.

FIND OUT MORE

FCA publishes Discussion Paper on a new duty of care

The FCA has issued a Discussion Paper (DP18/5) inviting interested parties to comment on the potential merits of introducing a new a duty of care on firms when dealing with consumers. This has been published alongside an 'Approach to Consumers' paper which explains how the FCA prioritises the needs of retail consumers in its decision-making and regulatory interventions. The deadline for responses to the Discussion Paper is 2 November 2018.

FIND OUT MORE

Broker fined £70,000 by ICO

A personal lines insurance broker has been fined £70,000 by the Information Commissioner's Office (ICO) for making 55,534 unsolicited calls to people who had registered with the Telephone Preference Service (TPS). This was a contravention of the Privacy and Electronic Communications Regulations (PECR).

FIND OUT MORE

FCA proposes to ban point-of-sale extended warranties

The FCA is consulting on a proposed point-of-sale ban on extended warranties as add-ons to consumer goods purchases; its research reveals that around 70% of consumers opt to buy such products. The proposed ban is discussed in pages 24-27 of the FCA's High-cost Credit Review (CP18/12) and, if it proceeds, is likely to come into effect in early 2019. The deadline for responses to the consultation is 31 August 2018.

FIND OUT MORE

FOS annual review 2017-18

The Financial Ombudsman Service (FOS) has published its Annual Review for the year to 31 March 2018. This highlights the themes and trends it has seen over the year in dealing with nearly 340,000 new complaints, 11% of which related to general insurance. The main themes are customer vulnerability, new technologies and consumers' loyalty and trust in financial services providers. The report includes a detailed data analysis of complaints received and resolved.

FIND OUT MORE

FCA publishes its annual Data Bulletin 

The FCA's latest annual Data Bulletin, comprised of summaries of data from firms' regulatory returns for year-ends in the 2017 calendar year, has been published. The data, split by type and size of firm, includes revenues, capital resource requirements, and professional indemnity insurance premiums as a percentage of revenue.

FIND OUT MORE

BIBA publishes standardised broker-insurer TOBA template

The British Insurance Brokers Association (BIBA) has published a Terms of Business Agreement template with a view to reducing the administrative burden on intermediaries who currently have to deal with diverse TOBA wordings between their various markets. BIBA hopes that the template, which is voluntary, will be adopted widely by non-Lloyd's insurers.

FIND OUT MORE

FCA regulation of claims management companies

The FCA has issued a Consultation Paper (CP18/15) which sets out how it proposes to regulate claims management companies (CMCs) when it becomes responsible for this in April 2019. The paper includes draft rules and guidance, the standards CMCs would have to meet, and the process for them to become authorised.

FIND OUT MORE

FCA publishes its Financial Lives Survey

The Financial Lives Survey 2017 is the FCA's first large-scale survey of UK adults and their finances, based on nearly 13,000 face-to-face and online interviews. The regulator sees it as a key source of information for underpinning its consumer protection work and considers that it provides valuable insights for any organisation focusing on consumers and finance. General insurance data tables from the survey are available for firms to download from the FCA's website.

FIND OUT MORE

FCA publishes research paper on price discrimination

In the light of its strategic objective to ensure that markets work well for consumers, the FCA has issued a short research paper which considers the fairness aspects of price discrimination in insurance and other financial services, and how best to balance them with economic considerations.

FIND OUT MORE

Law Commissions consult on insurable interest

The Law Commission and the Scottish Law Commission have published an updated draft Insurable Interest Bill, with accompanying notes. The aim of the Bill is to modernise the law for life and life-related insurances, such as accident and health cover.

FIND OUT MORE

Digital regulatory reporting

The FCA and the Bank of England are organising two six-month pilots to evaluate the feasibility of digital regulatory reporting. One pilot will focus on retail reporting and the other on wholesale reporting. Any firm that wishes to participate in either of the pilots should email regtech@fca.org.uk.

FIND OUT MORE

Discussion Paper published on firms' operational resilience

A joint Discussion Paper (DP18/4) has been issued by the FCA, PRA and Bank of England which seeks to highlight the risks posed by cyber-attacks and other disruptive operational incidents, recognising the financial system’s increasing reliance on technology, data and connectivity. Firms are invited to contribute to the discussion points raised in the paper by 5 October 2018.

FIND OUT MORE

The FCA’s role in preparing for Brexit

The FCA has issued a statement on its website explaining how it is preparing for a range of Brexit scenarios, including the need to amend its Handbook to ensure consistency with law changes, so that it functions effectively when the UK leaves the EU.

FIND OUT MORE

EIOPA’s InsurTech insight survey

The European Insurance and Occupational Pensions Authority (EIOPA) is seeking views from firms in the insurance value chain on the benefits and risks to insurers and consumers of 'InsurTech' solutions, for example: big data, algorithms, artificial intelligence, cloud computing and blockchain technology. 
The deadline for responses to the survey is 12 August 2018.

FIND OUT MORE

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