The Financial Conduct Authority (FCA) has today published the first of its two consultation papers on the implementation of the Insurance Distribution Directive (IDD).
The Insurance Mediation Directive (IMD) was introduced in early 2005 and was designed to encourage competition between insurance firms, as well as ensure appropriate levels of protection for customers, across the EU. The IDD aims to strengthen and consolidate the existing rules of IMD.
The IDD, with which the UK is required to comply by 23 February 2018, concerns the distribution of insurance and reinsurance, and also covers assisting in the administration and performance of an insurance contract post-sale.
The consultation paper covers the FCA’s proposals for the application of the directive, which include the following areas:
- professional and organisational requirements
- complaints handling and out-of-court redress
- professional indemnity insurance (PII)
- changes to conduct of business rules (for non-investment insurance contracts)
- the regulatory regime for ancillary insurance intermediaries
The IDD will apply more broadly than the IMD and bring consumer protection rules in line with those in other financial markets.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
"This directive is a significant piece of legislation with implications for the insurance industry as a whole. Many of the changes extend UK standards to other parts of the EU and where domestic provisions already exist we will seek to minimise the disruption to UK firms."
"As well as encouraging competition between insurance intermediaries, this directive will continue to ensure protection for insurance customers."
The second consultation paper will be published later this year and will include matters such as those IDD requirements which are yet to be adopted by the EU Commission. It will also address the FCA’s approach to the conduct requirements for life policies which are being considered in the light of ongoing implementation of the Markets in Financial Instruments Directive (MIFID) II.
Notes to editors
- Consultation Paper - CP17/7: Insurance Distribution Directive Implementation[1]
- The FCA requests responses to the consultation by 5 June 2017.
- The FCA will consider feedback and aim to publish rules in a Policy Statement by Q3 2017.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[2].