Compliance Newsletter – June 2017

FCA continues to investigate firms with ARs
The FCA has undertaken a piece of follow-up supervisory work on insurance intermediaries with Appointed Representatives (ARs) since it published the results of its thematic review on this subject in July 2016. The focus of the latest initiative was on London Market firms which had diversified and developed networks of ARs.

The work identified widespread failings in principals’ oversight of their ARs, resulting in further regulatory interventions.

For more information, click here and scroll down to the second page.

FCA seeks feedback on access to travel insurance
The FCA has issued a ‘Call for Input: Access to insurance’ paper in which it seeks views on the challenges firms face in providing travel insurance for consumers with pre-existing medical conditions; in particular, those who have (or who previously had) cancer. The regulator also wants to see how third party tools, such as medical screening systems, play their part in market segmentation and pricing, and whether more can be done to encourage innovation in the interests of vulnerable consumers.

The FCA expects its findings to have a read-across to other medical conditions and to other protection products, so the implications could be wide-reaching.

For more information, click here.

PRA to probe insurer delegation of authority
The Prudential Regulation Authority (PRA) has announced that it is to carry out a number of supervisory initiatives to improve its understanding of how individual insurers are being affected by soft market conditions.

A significant part of the PRA’s review will consider the impact of business written on delegated underwriting arrangements by MGAs and brokers and the effect such business has on their overall risk profile and results. In addition to this, the regulator will be conducting thematic work on distribution channels used by smaller Lloyd’s managing agents, including how these channels are evolving and the quality and cost of obtaining business from them.

For more information, click here.

Changes to ICOBS prompted by Insurance Act 2015
The FCA has announced some changes to its ICOBS rules from 1 August 2017, which are intended to clarify areas of potential overlap, conflict or inconsistency of language used between the Insurance Act 2015 and existing FCA rules. Revisions to text include the application of warranties and claims handling provisions.

To see the changes, which are contained in a Handbook Notice, click here and scroll down to page 10.

General Data Protection Regulation (GDPR) round-up
The Information Commissioner’s Office (ICO) has warned businesses that there is no time to delay in preparing for ‘the biggest change to data protection law for a generation’, calling on boards of directors to see the commercial benefits of sound data protection and to act now to ensure that their businesses are compliant by 25 May 2018.

For more information, click here.

The ICO has issued V2.0 of its ‘Preparing for the GDPR – 12 steps to take now’ document, which contains updates on various implications of the forthcoming Regulation which have become clearer since the original publication in March 2016.

For more information, click here.

Additionally, the ICO has launched a self-assessment checklist on its website, ‘Getting ready for the GDPR’, which provides firms with a report suggesting areas in which they may need to take further preparatory actions.

For more information, click here.

CII offers new Certificate in London Market Insurance
A new Level 3 Certificate in London Market Insurance has been launched by the Chartered Insurance Institute (CII). This is designed to develop knowledge and understanding of the underwriting disciplines within the London Market and key elements of the cycle. It also explores the opportunities and challenges posed by using different distribution channels, such as delegated underwriting.

Completion of the Certificate entitles CII members to use the designation ‘Cert CII (London Market)’.

For more information, click here.

Lloyd’s round-up
Lloyd’s has announced the launch of two new complaints eLearning modules for coverholders and third party administrators. The first is aimed at those which have complaints handling authority and the second is an abridged version for those that do not. Details of how to sign up for the modules are available from managing agents.

For more information about this and other developments in UK complaints handling at Lloyd’s, click here.

Lloyd’s has made changes to Version 5 of its Coverholder Reporting Standards, adding new materials and correcting previous errors. No new requirements have been added.

For more information, click here.

Following extensive consultation with the market, the Lloyd’s Market Association (LMA) has issued a new coverholder audit scope which is available for use in a pilot phase, which will run until mid Q3 2017.

For more information, click here.

FCA monitors compliance with renewal disclosure rules
The FCA is currently assessing firms’ implementation of the new consumer renewal disclosure rules, which came into force on 1 April 2017, to ensure that firms are giving customers clear and fair disclosure on renewal prices. It says it has seen good practice but also some ‘concerning examples’, which it intends to address with the firms concerned.

Recently, the FCA found that direct insurer Admiral had included inaccurate previous-year premium details in renewal documents issued to some customers. As a result, the insurer has agreed with the regulator to contact affected policyholders, offering full premium refunds if they chose to take out cover with another insurer.

For more information, click here.

Cyber security warning from the FCA
The FCA has stated that it expects firms to be aware of threats to their businesses from cyber attacks and to be able to defend themselves effectively, helping to ensure that consumers remain protected and to uphold market integrity. It has also issued a one-page guide: ‘Good cyber security ‒ the foundations’ in which it suggests effective cyber security measures, and how to respond to a cyber incident.

For more information, click here.

FCA to resume ‘Live & Local’ events
Following the success of its 2016/17 Live & Local programme, the FCA has announced that further events will commence some time in the autumn of 2017, including interactive workshops with a Q&A roundtable consisting of FCA and insurance industry representatives. The structure of the new programme is slightly different from the previous version and the regulator will visit each region more than once to give firms greater opportunity to attend a variety of events.

Half-day presentations in London tailored to wholesale and retail insurance firms are also being planned, focusing on key issues specific to each type of firm.

For more information, click here.

PSC Register changes
From 26 June 2017, any changes to the register of people with significant control (PSC) in companies and limited liability partnerships have to be notified to Companies House (CH) within 28 days of the change taking place. The previous system of updating CH via the annual confirmation statement has been discontinued.

For more information, click here.

FCA Handbook – enhanced search functionality
The FCA is piloting a new ‘browse by topic’ feature on its online Handbook, with the aim of helping users to find related material quickly and easily. Additionally, a ‘Related Sections’ tab will show other sections within the Handbook that cover the same topics. Currently the pilot is limited to COBS but the regulator intends to roll this out to the other sections of the Handbook in due course.

For more information, click here.

FCA to hold Annual Public Meeting
On 18 July 2017, the FCA will hold a public meeting in London to discuss its 2016/17 Annual Report and how it has delivered against its objectives.

The event will also be livestreamed via the FCA website. Although there is no fee to attend the event, attendees are required to register in advance.

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.

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