Regulator publishes EU withdrawal impact assessment
The FCA has published its EU Withdrawal Impact Assessment setting out two main scenarios. One is where the UK leaves with no deal and the other is where the UK leaves the EU in accordance with the Withdrawal Agreement advocated by the Prime Minister. If the UK leaves the EU without an agreement either on 29 March 2019 or on 31 December 2020, this means defaulting to a “third country” relationship. EU legislation would cease to apply in the UK. Instead, the relevant legislation would be converted into UK law through the EU (Withdrawal) Act and amended by Government and regulators to ensure the UK continues to have a functioning regulatory regime. There are 5,476 UK firms with passports to do business in the EEA that would no longer enjoy passporting rights. If the draft Withdrawal Agreement is ratified an implementation period will run until 31 December 2020, during which EU law will apply to the UK. The implementation period may be extended once with both parties’ mutual consent. The FCA has consistently supported an implementation period to avoid cliff-edge risks and smooth the UK’s transition to a new relationship with the EU.

Live & Local events
The FCA is continuing its UK-wide programme of events for general insurance firms involving an interactive workshop on the extension of the Senior Managers and Certification Regime (SM&CR)/ Insurance Distribution Directive (IDD) and ‘ask the regulator’ Q&A roundtable discussions.
Registration is open for these events taking place across the UK

Milestone for insurers as they come under the SM&CR
The Senior Managers and Certification Regime (SM&CR) has been extended to all insurers regulated by the FCA and PRA from 10 December 2018. The SM&CR replaces the Senior Insurance Managers Regime (SIMR) and the Approved Persons Regime. It aims to increase individual accountability and improve culture and governance. It will ensure that all staff understand who has ultimate and overall responsibility. It will also ensure firms’ governance arrangements are transparent and set clear expectations for the conduct of staff. A similar regime for most other authorised firms is due to come in from December 2019.

Aggregator home insurance deals in the spotlight
The Competition and Markets Authority has provisionally found that clauses in many of ComparetheMarket’s contracts with home insurers break competition law and could lead to higher premiums. After reviewing the evidence, the CMA provisionally found that these so-called “most favoured nation” clauses could be causing customers to miss out on better home insurance deals. This is because the clauses prevent rival comparison sites and other channels from trying to win home insurance customers by offering cheaper prices than ComparetheMarket. It also means home insurance companies are more likely to pay higher commission rates to comparison sites with the extra costs potentially being passed on to customers. The company has an opportunity to respond in detail and the CMA will consider the response and any further evidence before reaching a final decision.

FCA confirms greater access for SMEs to the ombudsman and proposes higher award limit
The FCA has confirmed plans to extend access to the Financial Ombudsman Service to more small and medium-sized enterprises. The changes will mean that SMEs with an annual turnover below £6.5m and fewer than 50 employees or an annual balance sheet below £5m, will now be able to refer unresolved complaints to the ombudsman service. The FCA has published near-final rules, so that the FOS can start taking practical steps towards putting the extension of its remit in place, including starting recruitment of additional staff with the skills and experience required. The final rules on the SME extension are expected to come into force on 1 April 2019. The FCA has also published a consultation paper on raising the maximum amount of compensation the ombudsman service can require financial services firms to pay out from £150,000 to £350,000.

FCA launches general insurance market study
A market study is underway to give the FCA a deeper understanding of the scale of any harm to consumers from general insurance pricing practices. The terms of reference for the market study have been published alongside a report which sets out the key findings of a thematic review on the pricing practices of home insurance firms; and a discussion paper on fair pricing in financial services markets. Under the terms of reference, the study will cover motor and home insurance providers, including some intermediaries.