Hot Topics

Below is a flavour of some of our recent articles. To access the full article clients can log into the ICS Compliance Manual.

24/10/2019 HT 2019-10 General Insurance Pricing Practices – interim report suggests further regulatory intervention

Building on its determination to ensure customers receive good value, appropriate insurance products and fair treatment, the FCA has been carrying out a market study on general insurance pricing practices. We look at the interim report (MS18/1) recently published and the possible remedies being considered by the FCA.

26/09/2019 HT 2019-09 SM&CR – Considerations for Human Resources

This article looks from the Human Resources (HR) point of view at some of the changes that firms may need to make to meet the SM&CR requirements.

28/08/2019 HT 2019-08 Are you ready for the SM&CR?

The Senior Managers and Certification Regime will apply to insurance intermediaries and other solo-regulated firms from 9 December 2019, having been introduced for banking firms in 2016 and insurers in December 2018. This article follows the publication of Policy Statement (PS 19/20), which confirmed the final rules for the SM&CR, and looks further at some of the implications for insurance intermediaries.

24/07/19 HT 2019-07 Assessing adequate financial resources

The FCA has issued a consultation paper (CP19/20) which sets out  to provide more clarity over how it assesses the adequacy of a firm’s financial resources, the practices firms can adopt when assessing their resources and the role of adequate financial resources in minimising harm to consumers and markets. This article looks at how this affects UK general insurance intermediaries.

20/06/19 HT 2019-06 RMAR Reporting – an update

Concentrating on the Sections of the regulatory return usually completed by general insurance intermediaries, this article looks at the reasons why the regulator collects certain types of information and highlights areas which have sometimes proved problematic.

29/05/19 HT 2019-05 GDPR – One year on

Although it may appear to be largely ‘business as usual’, Data Protection is an on-going commitment and it is important to keep it high on the compliance agenda. Rather like Y2K, the potential for turmoil never materialised but, unlike Y2K, the effects of the GDPR are far reaching and here to stay, Brexit or no Brexit. This article looks at what has happened since May 2018 , when GDPR came into force, in terms of compliance and enforcement.

25/04/19 HT 2019-04 Ensuring value in distribution chains

Alongside its thematic review report on  general insurance distribution chains, the regulator has issued a warning to the industry that it will intervene where firms fail to have appropriate regard to the value customers receive. This article looks at the problems involving distribution chains and the FCA’s proposals to ensure customers get a fair deal.

26/03/19 HT 2019-03 Wholesale Market Review

The FCA is proposing that specific value-measures data be reported by insurers on an annual basis in respect of most types of consumer insurance. The data, including claims frequency, average pay-outs and complaints, would be publicly available on the FCA website. As well as providing a resource for consumer groups and the media, the FCA expects the data to be used by firms for product governance, monitoring and development.

27/02/19 HT 2019-02 Value Measures

The FCA is proposing that specific value-measures data be reported by insurers on an annual basis in respect of most types of consumer insurance. The data, including claims frequency, average pay-outs and complaints, would be publicly available on the FCA website. As well as providing a resource for consumer groups and the media, the FCA expects the data to be used by firms for product governance, monitoring and development.

23/01/19 HT 2019-01 Due Diligence

There has been a worrying incidence of failures of unrated, non-UK based insurers and, unsurprisingly, the FCA is taking a particular interest in where brokers place business. This article looks at some of the steps firms can take to demonstrate due diligence in the selection of insurers.

13/12/18 HT 2018-14 Fair pricing

In view of growing concerns over pricing in general insurance, the FCA is extending its market study on pricing practices and evaluating the impact of the renewal transparency rules already introduced. Alongside this the regulator sent a letter to CEOs of regulated GI firms setting out its expectations for the governance, control and oversight of pricing practices and issued a Discussion Paper on fair pricing in financial services more generally . This article looks at the background to the perceived problems with insurance pricing and the measures the regulator is taking.

02/11/18 HT 2018-13 SMEs the FOS

The FCA has issued near-final rules to allow more small and medium-sized enterprises (SMEs) to lodge a complaint with the FOS. Alongside this change the FCA is consulting on proposals to increase the maximum amount of FOS compensation awards. This article looks at the changes and their likely impact on insurance intermediaries.

11/10/18 HT 2018-12 Preparing for Brexit

Whilst the terms of our withdrawal from the EU remain uncertain, the FCA continues to prepare for a range of scenarios, including one in which the UK leaves the EU on 29 March 2019 without a withdrawal agreement. This article looks at how this might affect insurance intermediaries in the UK

01/10/18 HT 2018-11 Senior Managers & Certification Regime

The FCA is extending the senior managers and certification regime (SM&CR) to almost all regulated firms including insurance intermediaries. The regime, which is already in place for banks, will replace the existing approved person regime and come into effect on 9 December 2019. This article looks at the SM&CR requirements and suggests how firms might start to prepare for the changes.

05/09/2018 HT 2018-10 IDD Updates

This article reminds insurance intermediaries of the key IDD implementation issues (previously covered in ICS Hot TopICS) and indicates where updated guidance and template documentation can be found in the ICS Compliance Manual.

23/07/2018 HT 2018-09 Tracking unfair contract terms

The Consumer Rights Act 2015 (CRA) protects consumers against unfair terms in contracts and notices, whether they are buying a car, a concert ticket or an insurance policy. Whilst the Competition and Markets Authority (CMA) has the leadership role in overseeing the rights of consumers in the UK, the FCA has powers to challenge unfair terms in financial services consumer contracts – which might include brokers terms of business agreements and insurance documents as well as the terms and conditions of banks and other financial firms. This article looks at the legal and regulatory aspects relating to unfair contract terms.

25/06/18 HT 2018-08 FCA Business Plan

The priorities in the FCA’s latest Business Plan reflect the variety of changes affecting both financial services and the wider society. The plan sets out how the FCA plans to use its resources to tackle the challenges posed by rapidly evolving user needs and the heightened uncertainty in the economic and political outlook. This article looks at the plan and, in particular, the areas of focus for the general insurance sector.

08/06/18 HT 2018-07 Renewal Transparency Revisited

While continuing to monitor how the renewal transparency rules have been implemented, the FCA has started to look into renewal pricing, in particular the issue of dual-pricing. This article revisits the renewal transparency rules, considers the FCA’s concerns over the way firms are implementing them and looks as how the momentum to ensure customers get a fair deal at renewal is increasing.

09/05/18 HT 2018-06 GDPR Marketing

Marketing to individuals – whether postal, phone, e-mail, text or in any other form – is regulated along with other data processing activities and firms will have to show that they have a lawful basis for such activity. This article aims to explain the effects of the GDPR and PECR on marketing by insurance intermediaries, based on ICS’s current understanding of the requirements. It includes links to relevant guidance from the Information Commissioner’s Office (ICO) as well as a summary table setting out the main requirements.

28/03/18 HT 2018-05 GDPR Practical Matters

In this article we set out a provisional change to our template Terms of Business Agreement (TOBA) to take into account the GDPR and a Q&A session which aims to shed light on some of the practical issues, including consent.

20/03/18 HT 2018-04 IDD – FCA Policy Statement – 18/1

In January this year, the FCA issued its third policy statement (PS 18/1) on the implementation of the Insurance Distribution Directive (IDD). The government has subsequently announced a change to the date of implementation. Once ratified by the European Authorities and relevant UK legislation, the effective date of the new rules will be 1 October 2018 (rather than 23 February 2018). This gives intermediaries, insurers and software providers more time to make the necessary changes. This article concentrates on the content of the PS relevant to the role of general insurance intermediaries, with particular regard to conflicts of interest, product oversight and governance and perimeter guidance.

14/02/18 HT 2018-03 The GDPR train fast approaching

The EU General Data Protection Regulation (GDPR) marks the most significant change to data privacy regulation since the Data Protection Act of 1998. If you are not already aware, the GDPR enforcement date is fast approaching – 25 May 2018. That deadline is not going to be extended.

15/01/18 HT 2018-02 IDD – Product Oversight and Governance

This is the third in a series of Hot TopICS concerning the details of the forthcoming changes that will affect, amongst others, general insurance intermediaries as a result of the Insurance Distribution Directive (IDD). This article looks at the IDD requirements on Product Oversight and Governance (POG) and the FCA proposals to implement them.

03/01/18 HT 2018-01 Wholesale Insurance Broker Market Study – Terms of Reference

The FCA has issued the Terms of Reference (ToR) in relation to a new market study (MS17 2.1) which will enable it to effectively assess whether the wholesale insurance broker sector is working to provide appropriate outcomes in the markets in which it operates. This is in line with part of the FCA’s 2017/2018 mission, which states:
“ …. We want to ensure that wholesale markets demonstrate open access, transparency, integrity and competition on merits.”

05/12/17 HT 2017-13 IDD Conflicts of Interest

This is the second of a series of Hot TopICS concerning the details of the forthcoming changes that will affect general insurance intermediaries as a result of the Insurance Distribution Directive (IDD). This article looks at the IDD requirements on conflicts of interest and the FCA proposals to implement them.

15/11/17 HT 2017-12 IDD Knowledge & Competence

This is the first of a series of Hot TopICS concerning the details of the forthcoming changes that will affect insurance intermediaries as a result of the imminent implementation of the Insurance Distribution Directive (IDD). This article relates to the changes that arise in the FCA’s requirements for employee knowledge and competence, including the new CPD requirements.

01/11/17 HT 2017-11 IDD Preparation

The IDD is due to be transposed into UK law in 2018 and, whilst some aspects remain under consultation, a number of important changes to FCA rules have already been introduced. The government has said it intends to plough ahead with the IDD provisions regardless of the ongoing Brexit negotiations. It is therefore essential that firms are in a position to comply when the new regime comes into force. Following the FCA’s Policy Statement PS17/21, which set out near-final rules in response to the IDD, this article looks at the main implications for UK insurance brokers in terms of the customers’ best interests rule, pre-contract disclosures, product oversight and distribution and professional indemnity insurance.

19/09/17 HT 2017-10 Succession Planning

Succession planning is crucial to any business but may be overlooked as firms strive to retain or improve their position in the market. This article looks at succession planning as an important aspect of compliance and internal risk management.

1/09/17 HT 2017- 09 Conduct Risk

The FCA’s conduct risk agenda encourages firms to have systems and frameworks in place to identify and manage conduct risk.  Conduct risk is akin to but goes beyond the principle of “treating customers fairly”.  This article looks at conduct risk and how insurance brokers might address it.

04/08/17 HT 2017- 08 Cyber risks

Several instances of Ransomware attacks have raised the visibility of cyber-attacks in recent months. Naturally, the FCA is concerned to ensure that regulated firms react appropriately to the threats to which they are exposed and protect the data and sensitive information that they hold. This article looks at the threats posed and the measures firms can take to help to protect themselves

13/07/17 HT 2017- 07 Pitfalls

Claims against brokers often arise when an insurer denies or reduces a claim through non-disclosure, misrepresentation, under-insurance or non-adherence to policy terms and conditions. In this article, Barry Hammond, who has been an expert witness on broker negligence cases for nearly 20 years, explains some of the things which brokers can get wrong and offers his tips on avoiding claims for professional negligence.

11/05/17 HT 2017- 06 FCA Business Plan and Risk Outlook

The FCA has signalled that it will be paying particular attention to insurance distribution models and pricing as part of its Business Plan for 2017-18. This article provides an overview of the “Risk Outlook” for insurance firms and the regulator’s plans to address some of the issues.

13/04/17 HT 2017- 05 Preparing for General Data Protection Regulation

The General Data Protection Regulation (GDPR) will apply in the UK from 25 May 2018, replacing the Data Protection Act 1998. The changes are wide-ranging and include new provisions for the ‘right to be forgotten’, data portability and data breach notification. The UK Information Commissioners Office (ICO) has advised data controllers and processors to start planning for the changes brought about by GDPR as early as possible, making sure that key people in their organisation “buy in” to the updated approach. This article looks at the new regulations and what brokers can do to prepare for them.

23/03/17 HT 2017- 04 FCA proposals for implementing the Insurance distribution Directive

The UK is required to comply by 23 February 2018 with the Insurance Distribution Directive (IDD), which has a much broader scope than the Directive it replaces, the Insurance Mediation Directive (IMD). This article looks at the changes to UK regulatory rules and guidance proposed by the FCA to implement the directive, including changes to the training and competence and conduct of business requirements.

02/03/17 HT 2017- 03 Renewal Transparency

The new renewal transparency rules – involving disclosure of the previous year’s premium and a statement to encourage customers to shop around – apply both to intermediaries and insurers issuing renewal invitations to consumers on or after 1April 2017. This article takes a close look at the rules and sets out some FAQs to assist firms with implementation.

22/02/17 HT 2017- 02 Client Money rules & update

Although the FCA decided not to proceed with the changes to the rules in CASS 5, proposed in 2012, insurance intermediaries cannot be complacent. The existing client money requirements remain very much in force and the FCA has enhanced its monitoring in this area. New data is being obtained through firms’ regulatory returns and new standards for Client Assets Audits have been introduced. This article revisits the client money rules for insurance intermediaries and looks at the way they are now being monitored.

09/01/17 HT 2017- 01 Brokers’ PII arrangements in the regulatory spotlight

Following a study of the professional indemnity insurance arrangements of around 200 insurance intermediaries, the FCA has raised concerns over the scope and accuracy of some policies. The review established that the capacity within the PII market was good but some of the contracts examined contained exclusion clauses which could reduce the scope of the cover below that required by the rules and some carried a policy excess greater than that permitted. The FCA also found a high level of inaccuracies in policy wordings, especially around the cover for Financial Ombudsman awards and for any appointed representatives.