The Financial Conduct Authority (FCA) has proposed removing non-UK business from the scope of Consumer Duty.
The regulator is proposing to simplify the rules that apply when insurance is sold and will remove business for genuinely non-UK customers from the duty’s scope where there is no clear UK link or reasonable expectation of UK protection.
It said it will also establish clearer boundaries around what is out of scope, so businesses can focus on running their business rather than having to show that the duty does not apply.
And it said there will be more clarity on firms’ responsibilities when they work together, including across distribution chains and in the design of complex products.
Narrowing the scope of rules for non-UK business
The regulator revealed it is proposing to amend the territorial application scope of its Insurance Conduct of Business Sourcebook (ICOBS) and our Product Intervention and Governance Sourcebook chapter 4 (PROD 4).
The detailed insurance conduct requirements would apply where there is a clear UK connection, based on the customer’s habitual residence and, where relevant, the location of the risk.
This aims to reduce duplication and potential conflict with overseas regulation.
High-level requirements (such as the Principles (PRIN) (other than the duty) and the Senior Manager Arrangements, Systems and Controls sourcebook (SYSC) rules) will maintain appropriate consumer protections, the regulator argued.
Simon Walls, executive director of markets at the FCA, said: “The Consumer Duty is helping deliver good outcomes and build confidence for retail consumers, but it was never intended to become a wholesale duty, imposing on deals between sophisticated parties.
“That’s why we are refining its scope to provide greater clarity to wholesale markets and keep the focus on the consumer outcomes it was created to improve”.