Compliance Newsletter – June 2020

FCA finalises guidance on product value
The FCA has finalised its guidance for insurers and intermediaries for assessing product value in the light of Covid-19. It expects all firms which manufacture insurance products to review their product lines and decide on any resulting action by 3 December 2020. The regulator intends to review its guidance by December to assess whether it is still needed after that date.

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FCA BI test case round-up
On 17 June 2020, the FCA published FS20/8: Business interruption insurance test case: Guidance for firms which came into effect the same day. As well as applying to insurers, the guidance also applies to intermediaries which handle claims on an insurer’s behalf.

Changes made to the draft guidance include making it clear that the regulator’s expectations are restricted to relevant non-damage business interruption policies and that its test case does not include coverage issues on clauses where Covid-19 is not specified in an exhaustive list of notifiable diseases.

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In the meantime, the FCA’s High Court proceedings are now underway, with the first case management conference having taken place on 16 June 2020. Links to published court documents and regular updates on the proceedings can be obtained from the FCA’s dedicated web page.

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FCA finalises its temporary guidance to help customers in financial difficulty
Following a short consultation, the FCA has finalised a series of temporary measures to help customers who hold insurance and premium finance products and who may be in financial difficulty because of Covid-19. The temporary measures are due to be reviewed later this summer.

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FCA finalises guidance on assessing adequate financial resources
The FCA has published its final guidance on a framework to help firms ensure they have adequate financial resources and to take effective steps to minimise harm.The guidance does not place specific additional requirements on firms because of Covid-19, but the regulator comments that the current crisis has highlighted the need for adequate resources to be in place and how firms’ requirements may change in the future.

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FOS round-up

The Financial Ombudsman Service (FOS) has published its annual complaints data for 2019/20 which shows that complaints about insurance (excluding PPI) fell by 12% compared with the previous year. Motor insurance continued to be the most complained-about non-PPI general insurance product.

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The FOS has also published‘Taking us to 2025: Our strategy’, which sets out its three strategic priorities for the next five years. These are enhancing its service, preventing complaints and unfairness arising, and building an organisation with the capabilities it needs for the future.

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FCA grants temporary CPD flexibility
The FCA has announced that, due to the operational impact of Covid-19, it istemporarily allowing firms to let individuals in exceptional circumstances carry over any uncompleted CPD hours to their next CPD year. The ability to carry-over applies only to CPD years ending before 1 April 2021.

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Lloyd’s launches Brexit-transfer microsite
Lloyd’s has launched an information section on its website regarding the transfer of certain policies to Lloyd’s Brussels ahead of the anticipated loss of UK-EEA passporting rights when the Brexit transition period expires on 31 December 2020.

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Increase in minimum PI limits under IDD
The European Insurance and Occupational Pensions Authority (EIOPA) are required to review the base amounts for professional indemnity insurance every five years to take into account changes to the European index of consumer prices. The new minimum limits for insurance intermediaries applicable from 12 June 2020 are €1,300,380 per claim and €1,924,560 in the aggregate.

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FCA warning on cyber security
The FCA regards the current shift to remote working to present an increased risk to cyber security. It has urged firms to enhance monitoring to protect against malicious attacks which could affect information and firm-critical processes, including network connections and video conferencing software.

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ICO sets out its priorities during Covid-19 and beyond
The Information Commissioner’s Office (ICO) states that its work over the coming months will be focused on three key areas: protecting public interests, enabling organisations to engage in responsible data sharing, and monitoring intrusive and disruptive technology. It has identified a number of priorities which will enable it to work effectively in those key areas.

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FCA extends temporary cover period for absent Senior Managers
Due to the impact of Covid-19, the FCA hasextended the maximum period firms can arrange cover for an unexpected absence of a Senior Manager, without the individual being approved, from 12 weeks to 36 weeks. Firms are able to apply for the extended cover period as a precautionary measure, in advance of actually needing it.

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Regulatory Initiatives Grid launched
A new Grid, designed to inform financial services firms of future regulatory work, has been launched by the Financial Services Regulatory Initiatives Forum comprising the FCA, the Prudential Regulation Authority, the Bank of England,the Payment Systems Regulator and the Competition and Markets Authority.

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FCA publishes ‘Conduct, culture and Covid-19’ insight
The FCA has published a multiple-authored article on how Covid-19 has rapidly changed the world and its working practices, and the challenges, risks and opportunities that this situation presents.

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GABRIEL to be replaced by ‘RegData’
The FCA has confirmed the launch of a new data collection system to replace GABRIEL, called RegData. The regulator will be moving firms and their users to the new system on a staged basis.

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New FCA Chief Executive appointed
Nikhil Rathi, the current Chief Executive of London Stock Exchange plc, has been appointed as the FCA’s new Chief Executive for a five-year term. He will succeed Christopher Woolard, who has acted as interim Chief Executive since Andrew Bailey stepped down from the post in March 2020.

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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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