Clearer insurance advice definitions on way under new regulations
Insurance advice is set to become clearer under new regulations coming into force early next year. It is hoped the Insurance Distribution Directive (IDD) will put an end to ambiguous advice definitions and create more trust in the insurance industry, following a series of consultations by the Financial Conduct Authority (FCA).
The improvements are set to be made when the FCA clarifies how the European Union’s incoming Insurance Distribution Directive is to be implemented and what will constitute ‘advice’ under it. Despite Brexit and the current uncertainty over the UK’s departure from the EU, the IDD is in line with the FCA’s regulatory approach and the proposals are set to become regulation by next February.
A policy statement is due in September outlining how firms regulated by the FCA will be expected to implement the directive, as well as defining what will be considered as ‘advice’. The IDD will go further than the previous Insurance Mediation Directive it replaces, placing a greater focus on the customer and aiming to create a level playing field in the insurance and redistribution market.
The IDD now includes, amongst others, intermediaries, insurance companies and their employees, travel agents, car rental companies and online distribution, with the aim of achieving transparency, fairness and consumer protection.