IDD general good requirements

The following table is intended to provide the information required under article 11 of the Insurance Distribution Directive (the IDD). The table below sets out certain FCA Handbook rules which apply to an incoming firm exercising a passport right under the IDD and so are considered to be general good provisions.

PRA-authorised persons should also refer to the relevant parts of the PRA Rulebook.

Firms passporting under other sectoral directives will need to ensure they understand and comply with requirements which are applied based on a firm being in scope of those other directives.

In order to assist firms, this table includes notes on the application of the FCA Handbook for incoming EEA firms. These notes are not a substitute for the detailed application provisions in the FCA Handbook. Where the table indicates that a particular module of the Handbook may apply, its application in relation to any particular activity is dependent on the detailed application provisions in that module.

For an incoming EEA firm which has permission for cross-border services only, many parts of the Handbook apply only if the firm carries on regulated activities in the UK. Those parts of the Handbook will therefore not apply if the firm confines its activities to those within the overseas persons exclusions in article 72 of the Regulated Activities Order, or which would not be regarded as carried on in the UK. Further guidance may be found in PERG 2.4 (Link between activities and the United Kingdom) and PERG 2.9.15G to PERG 2.9.17G (Overseas persons).

Firms should also look at SUP 13A Annex 1, ‘Application of the Handbook to Incoming EEA Firms’, to understand the application of FCA rules. Incoming firms which are undertaking additional activities in the UK covered by the passport right under another sectoral directive or for which the firm would require additional Part 4A permission, may be subject to additional FCA requirements. Firms should look at SUP 13 Annex 1 in relation to the application of the rules to these other activities.

The table uses defined terms in the Glossary to the FCA Handbook.

Principles for Businesses (PRIN)
Senior Management Arrangements, Systems and Controls sourcebook (SYSC)
General Provisions (GEN)
Conduct of Business sourcebook (COBS)
Insurance: Conduct of Business Sourcebook (ICOBS)
Product Intervention and Product Governance Sourcebook (PROD)
Supervision manual (SUP)
Dispute Resolution: the Complaints sourcebook (DISP)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

Principles for Businesses (PRIN)

PRIN 2.1.1R

The Principles

Article 10, Chapters 5 and 6

The Principles apply only insofar as responsibility for the matter in question is not reserved by an EU instrument to the firm's home state regulator. The Principles have limited application for activities which are not carried on from a UK establishment.

Senior Management Arrangements, Systems and Controls sourcebook (SYSC)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

 

 

The application of requirements in SYSC take into account sectoral EU legislation by disapplying certain requirements where the matter is reserved to a home state regulator. Also, for firms operating only on a cross-border services basis, rules will not apply where the firm is not carrying on regulated activities in the UK.

SYSC 3.1.6R
Additional SYSC 2 and 3 rules will apply to incoming EEA insurers but in their capacity as insurer rather than purely for insurance distribution. Those requirements have not been specifically included here. Firms will be responsible for identifying and meeting these additional rules.

Competent employees rule

Article 10

We are maintaining a pre-IDD requirement and are treating this as a general good requirement. Firms should consider the application of this requirement in light of in SYSC 1 Annex 1 and, in particular, Part 1 1.1R including that requirements apply only insofar as responsibility for the matter in question is not reserved by an EU instrument to the firm's home state regulator.

SYSC 3.3

Additional requirements for insurance distribution: Conflicts of interest

Articles 27 and 28

This chapter is applied to insurers carrying an insurance distribution activities. It would apply to an incoming firm distributing any insurance products other than the IDD minimum requirements for insurance-based investment products (IBIPs) where these are reserved to the home state as general good requirements.

SYSC 4.1

General requirements

 

We are maintaining these pre-IDD requirements.

SYSC 4.1.1R

General requirements

 

SYSC 4.1.4R

Mechanisms and procedures for a firm

 

SYSC 4.4

Apportionment of responsibilities

 

We are maintaining these pre-IDD requirements.

 

SYSC 4.4.1AR

Application

 

SYSC 4.4.5R

Allocating functions of apportionment and oversight

 

SYSC 5

Skills, knowledge and expertise

 

We are maintaining pre-IDD requirements. Firms should consider the application of the requirements in light of SYSC 1 Annex 1 and, in particular, Part 2 2.2R.

 

SYSC 5.1.1R

Competent employees rule

Article 10

SYSC 5.1.5BR

Knowledge and competence

 

SYSC 5.1.13R

General

 

SYSC 6.1

Compliance

 

We are maintaining these pre-IDD requirements.

 

SYSC 6.1.1R

Adequate policy and procedures

 

SYSC 6.1.4R
SYSC 6.1.4AR

Compliance function

 

SYSC 8.1.6R

General outsourcing requirements

 

We are maintaining this pre-IDD requirement.

SYSC 9

General rules on record-keeping

 

 

SYSC 9.1.1R

General requirements

 

We are maintaining this pre-IDD requirement.

SYSC 9.1.2A R

Specific requirements for the distribution of insurance-based investment products

Article 30

We are maintaining this pre-IDD requirement.

SYSC 10.1

Conflicts of interest

Articles 27 and 28

This section applies to firms (including incoming EEA firms) carrying on insurance distribution activities in relation to any insurance product. In this chapter, we are maintaining existing requirements and are also applying additional MiFID II-derived standards to firms doing insurance distribution. Where an incoming firm is doing insurance distribution business in relation to IBIPs, the minimum IDD requirements are disapplied where these are reserved to the home state regulator and/or to the extent that the requirements are found in the IDD Delegated Regulation (EU) 2017/2359.

SYSC 22-27

Senior managers and certification regime

 

We apply these stricter requirements. For firms passporting under the IDD (i.e. insurance, reinsurance and ancillary insurance intermediaries) these rules will apply from December 2019.

General Provisions (GEN)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

GEN 1.1
GEN 1.2

FCA approval and emergencies

 

GEN applies to incoming firms except:

  • GEN 4 does not apply to the extent that the firm is subject to equivalent rules imposed by its home state (GEN 4.1.1R (3))
  • GEN 4 does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the UK (see GEN 4.1.1R).
  • GEN 6 only applies to business that can be regulated under sections 137A and 137G of the Financial Services and Markets Act. It does not therefore apply if, or to the extent that, responsibility has been reserved to an incoming firm's home state regulator by an EU instrument.

GEN 2

Interpreting the handbook

 

GEN 4

Statutory status disclosure

 

GEN 5

Regulators’ logos and the Key facts logo

 

GEN 6

Insurance against financial difficulties

 

Conduct of Business sourcebook (COBS)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

COBS 1 Annex 1

Application

 

The requirements in this sourcebook will generally apply to incoming firms.

COBS applies to a firm which carries on insurance distribution activities (1) from an establishment in the UK; or (2) with a client in the UK from an establishment overseas unless those activities if the office from which the activity is carried on were a separate person and the activity: (a) would fall within the overseas persons exclusions in article 72 of the Regulated Activities Order; or (b) would not be regarded as carried on in the UK.

The territorial scope of the sourcebook is modified to the extent necessary to be compatible with EU law. Also, for an incoming EEA firm, the general good rules within the IDD’s scope will apply unless the home state imposes measures of like effect. Guidance on the territorial application of COBS is contained in COBS 1 Annex 1 Part 3.

This sourcebook will apply to IDD ancillary insurance intermediaries (AIIs), to the extent they carry on insurance distribution in relation to a life policy in the UK, in the same way it applies to an insurance intermediary. This will include all IDD minimum requirements which are not specifically referred to in this table but can be identified by notes which identify the relevant provision of the IDD being implemented.

COBS 2.1.2R

Exclusion of liability

Chapters 5 and 6

We are maintaining this pre-IDD requirement.

COBS 2.2A.2R
COBS 2.2A.3R

Information disclosure before providing services

Article 20 and 29

These additional disclosure requirements above IDD minimum would apply to non-IBIP life policies.

COBS 2.3

Inducements relating to business other than … insurance-based investment products

Article 22

These requirements apply to non-IBIP life policies. The associated guidance in COBS 2.3 is also relevant.

 

 

 

COBS 2.3.1R
COBS 2.3.2R

Rule on inducements

 

COBS 2.3.10E

Paying commission on non-advised sales of packaged products

 

COBS 2.3.12E

Providing credit and other benefits to firms that give personal recommendations on retail investment products or P2P agreements

 

COBS 2.3.17R

Record keeping: inducements

 

COBS 2.3A

 

Inducements relating to … insurance-based investment products

Article 29

This chapter applies stricter requirements than the IDD minimum as we apply the MiFID II standards for inducements.

COBS 2.3A.1R

Application

 

COBS 2.3A.5R
COBS 2.3A.6R
COBS 2.3A.7E

Rules on inducements

 

COBS 2.3A.8R
COBS 2.3A.9R

Fees, commissions or non-monetary benefits which are designed to enhance the quality of a service

 

COBS 2.3A.10R
COBS 2.3A.11R
COBS 2.3A.12R
COBS 2.3A.13R
COBS 2.3A.14R

Disclosure of payments or benefits received from, or paid to, third parties

 

COBS 2.3A.15R

Inducements relating to the provision of independent advice, restricted advice and portfolio management services to retail clients in the United Kingdom

 

COBS 2.3A.16R

Inducements relating to the provision of independent advice and portfolio management services to retail clients outside the United Kingdom or to professional clients

 

COBS 2.3A.24E

Paying commission on non-advised sales of packaged products

 

COBS 2.3A.27E

Providing credit and other benefits to firms that advise retail clients on retail investment products

 

COBS 2.3A.32R

Record keeping: inducements

 

COBS 2.5.1R

Optional additional products - Restriction on marketing or providing an optional product for which a fee is payable

Article 22 and 25

We are maintaining this pre-IDD requirement.

COBS 3

Client categorisation

 

This chapter provides requirements for the way in which firms need to identify the type of client with whom they are dealing. It includes some systems requirements which firms must meet.

COBS 4.5

Communicating with retail clients

 

We are maintaining these pre-IDD requirements.

 

 

COBS 4.5.1R

Application

 

COBS 4.5.2R

General rule

 

COBS 4.5.6R

Comparative information

 

COBS 4.5.7R

Referring to tax

 

COBS 4.5.8R

Consistent financial promotions

 

COBS 4.6

Past, simulated past and future performance

 

We are maintaining these pre-IDD requirements.

 

 

COBS 4.6.1R

Application

 

COBS 4.6.2R

Past performance

 

COBS 4.6.6R

Simulated past performance

 

COBS 4.6.7R

Future performance

 

COBS 4.6.9R

Projections

 

COBS 4.7.1R

Direct offer financial promotion

 

We are maintaining this pre-IDD requirement.

COBS 4.8

Cold calls and other promotions that are not in writing

 

We are maintaining these pre-IDD requirements.

 

COBS 4.8.1R

Application

 

COBS 4.8.2R

Restriction on cold calling

 

COBS 4.8.3R

Promotions that are not in writing

 

COBS 4.8.3R

Financial promotions with an overseas element

 

We are maintaining these pre-IDD requirements.

COBS 4.9.1R

Application

 

COBS 4.9.3R

Financial promotions for the business of an overseas person

 

COBS 4.9.4R
COBS 4.9.5R
COBS 4.9.6R
COBS 4.9.7R

Financial promotions for an overseas long-term insurer

 

COBS 4.10

Systems and controls and approving and communicating financial promotions

 

We are maintaining these pre-IDD requirements. The rules primarily relate to approving financial promotions for communication by an unauthorised person.

COBS 4.10.2R
COBS 4.10.4R
COBS 4.10.5R

Approving financial promotions

 

COBS 4.10.10R

Relying on another firm's confirmation of compliance

 

COBS 4.11.1R

Record keeping financial promotion

 

We are maintaining this pre-IDD requirement.

COBS 6.1ZA

Information about the firm and compensation information

Articles 22 and 29

We are maintaining these pre-IDD requirements which apply to all insurance distribution activities in relation to all insurance products. These requirements would apply to all insurance distributors.

COBS 6.1ZA.7A R

Information about a firm and its services: insurance distribution

 

COBS 6.1ZA.10A R

Information concerning safeguarding of client money: insurance distribution

 

COBS 6.1ZA.15A R

Costs and associated charges disclosure: insurance distribution

 

COBS 6.1ZA.19A R

Timing of disclosure: specified rules for insurance distribution

 

COBS 6.1ZA.20A R

Keeping the client up to date: insurance distribution

 

COBS 6.1A

Adviser charging and remuneration

Articles 22 and 29

We are maintaining these pre-IDD requirements.

COBS 6.1B

Platform service provider requirements relating to adviser charging and remuneration

 

We are maintaining these pre-IDD requirements.

COBS 6.2B

Describing advice services

 

We have applied these requirements to advice in relation to all life policies.

COBS 6.4

Disclosure of charges, remuneration and commission

 

We are maintaining these pre-IDD requirements.

COBS 8.1

Client agreements

Articles 22 and 30

We are maintaining these pre-IDD requirements.

COBS 8.1.2R
COBS 8.1.3R

Providing a client agreement

 

COBS 8.1.4R
COBS 8.1.5R

Record keeping: client agreements

 

COBS 9

Suitability

Articles 20 and 22

The requirements for personal recommendations to retail clients apply in relation to non-IBIP life policies.

COBS 9.2.1R
COBS 9.2.2R
COBS 9.2.3R
COBS 9.2.4R

Assessing suitability: the obligations

 

COBS 9.2.5R

Reliance on information

 

COBS 9.2.6R

Insufficient information

 

COBS 9.2.9R

Friendly society life policies

 

COBS 9.4.1R
COBS 9.4.2R

Providing a suitability report

 

COBS 9.4.4R
COBS 9.4.6R

Timing

 

COBS 9.4.7R
COBS 9.4.8R
COBS 9.4.8AR

Contents

 

COBS 9.4.9R

Means of communication (life policies)

 

COBS 9.5.2R
COBS 9.5.3R

Record keeping and retention periods for suitability records

 

COBS 13

Preparing product information

 

We are maintaining pre-IDD requirements which apply to life policies. We are including these requirements here due to their relevance to additional requirements in COBS 14 below.

COBS 14

Providing product information to clients

Articles 22 and 29

We are maintaining these pre-IDD requirements which apply to life policies. They include additional requirements to those in IDD, for example in relation to providing a key features document and key features illustration.

COBS 14.2.1R

The provision rules for products other than PRIIPs

 

COBS 14.2.1BR

Provision of a generic key features illustration

 

COBS 14.2.1C R
COBS 14.2.2R
COBS 14.2.3R

Provision of information: other requirements

 

COBS 14.2.4R

Firm not to cause confusion about the identity of the producer of a product

 

COBS 14.2.5R

Exception to the provision rules: key features documents and key investor information documents

 

COBS 14.2.6R
COBS 14.2.6AR

Exception: key features illustrations

 

COBS 14.2.7R

Exception to the provision rules: key features documents and key features illustrations

 

COBS 14.2.8R

Exception to the provision rules: key features documents and key features illustrations

 

COBS 14.2.9R

Exception to the provision rules: key features documents, key features illustrations, key investor information documents and NURS-KII documents

 

COBS 14.2.12R
COBS 14.2.13R

Exception: successive operations

 

COBS 14.2.14R

The timing rules

 

COBS 14.2.16R
COBS 14.2.17R

Exception to the timing rules: distance contracts and voice telephony communications

 

COBS 14.3

Information about designated investments

 

We are maintaining these pre-IDD requirements which apply to life policies.

COBS 14.3.1R

Application

 

COBS 14.3.2R

Providing a description of the nature and risks of designated investments

 

COBS 14.3.8R

Product information: form

 

COBS 14.3.10R

The timing rules

 

Insurance: Conduct of Business Sourcebook (ICOBS)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

ICOBS 1

 Application

 

The requirements in this FCA sourcebook apply to a firm in relation to specified activities carried on in relation to non-investment insurance contracts from an establishment maintained by the firm, or its appointed representative, in the UK.
ICOBS applies except to the extent necessary to be compatible with European law. Guidance on the territorial application of ICOBS is contained in ICOBS 1 Annex 1 Part 4.
SUP 13A Annex 1 summarises the application of the FCA Handbook to an incoming EEA firm and this includes the application of ICOBS.
Firms should consider the application of this sourcebook in light of the general application section in ICOBS 1.1.1R and the modification to this rule set out in ICOBS 1 Annex 1.
This sourcebook also applies generally to IDD AIIs, except where the application of the requirement is modified to exclude them. This table does not note each instance where the sourcebook applies to IDD AIIs.

ICOBS 2

General matters

 

 

ICOBS 2.6.1R

Distribution of connected contracts through exempt persons

Article 1(4)

Should an IDD AII be distributing through an exempt IDD AII then this would be a general good provision.

ICOBS 4

Information about the firm, its services and remuneration

 

 

ICOBS 4.1.2R

 

Status disclosure: general information provided by insurance intermediaries or insurers
Status disclosure exemption: introducers

Articles 18 and 21

This contains general good requirements in respect of IDD AIIs. Article 21 of the IDD only applies part of article 18 of the IDD to IDD AIIs.

 

ICOBS 4.1.6R(1)
ICOBS 4.1.7R

Scope of service: insurance intermediaries

Articles 19(1) and 21

This contains general good requirements in respect of IDD AIIs. Article 21 of the IDD only applies part of article 19 of the IDD to IDD AIIs.

ICOBS 4.2.4R(1) and (3)

Disclosing the limits of the service provider

Article 20(1)

We are maintaining pre-IDD requirements for protection policies applying to a sale that does not involve a personal recommendation.

ICOBS 4.4.1R

 

Commission disclosure rule

Article 19

We are maintaining a pre-IDD requirement.

ICOBS 4.6.2R
ICOBS 4.6.5R

Commission disclosure for pure protection contracts sold with retail investment products.

Articles 19 and 23

We are maintaining pre-IDD requirements.

ICOBS 5

Identifying client needs and advising

 

We are maintaining pre-IDD requirements.

ICOBS 5.1.2R

Eligibility to claim benefits: payment protection policies

Article 19

We are maintaining pre-IDD requirements in relation to eligibility requirements.

ICOBS 5.1.3A R
ICOBS 5.1.3B R
ICOBS 5.1.3C R(1)

Eligibility to claim benefits: policies arranged as part of a packaged bank account

Article 19

We are maintaining pre-IDD requirements in relation to eligibility.

ICOBS 5.3.1R

 

Advised sales
Suitability

Articles 20(1), 20(2) and 21

We are maintaining the pre-IDD requirement of suitability.

ICOBS 5.3.2A R

 

Suitability of advice on policies included in a packaged bank account

Articles 20(1), 20(2) and 21

We are maintaining the pre-IDD requirement of suitability.

ICOBS 5.3.3R

Advice on the basis of a fair analysis

Articles 20(2), 20(3) and 21

We are applying this rule to IDD AIIs and maintaining the application to advice.

ICOBS 6

Product information

 

 

ICOBS 6.-1.5R

Responsibility for producing the standardised insurance product information document

Article 20(6)

This applies to IDD AIIs where they fall within the FCA manufacturer definition. In such circumstances, this is treated as a general good requirement.

ICOBS 6.1.5R

Ensuring customers can make an informed decision: the appropriate information rule

Article 20

We are maintaining pre-IDD requirements on appropriate information relating to mid-term changes.

ICOBS 6.4.4R

Policy Summary

Article 20

We are maintaining the pre-IDD requirements in relation to providing a policy summary.

ICOBS 6.4.4A R

 

Complaints and compensation information

Article 18

We are maintaining requirements to provide complaints and compensation information.

ICOBS 6.4.5R

Payment protection documentation: importance of reading documentation

Articles 20 and 23

We are maintaining pre-IDD requirements.

ICOBS 6.4.6R

Price information: general

Article 20

We are maintaining pre-IDD requirements.

ICOBS 6.4.9R(1)

Price information: premiums paid using a non-revolving credit agreement

Articles 20 and 23

We are maintaining pre-IDD requirements.

ICOBS 6.4.11R

Mid-term changes

Article 20

We are maintaining a pre-IDD requirement.

ICOBS 6.5.1R

 

Renewals

Article 20

We are maintaining pre-IDD requirements relating to application and information to be provided to the retail consumer.

ICOBS 6A.1

Guaranteed asset protection (GAP) contracts

 

 

ICOBS 6A.1.6R
ICOBS 6A.1.7R

Deferred opt-in for GAP contracts

n/a

We are maintaining pre-IDD requirements.

ICOBS 7.1

The right to cancel

n/a

We are maintaining pre-IDD requirements.

Product Intervention and Product Governance Sourcebook (PROD)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

PROD 4.2

Manufacture of insurance products

Article 25

PROD applies to any firm which carries on insurance distribution activities from an establishment in the UK. This would include incoming firms. To the extent that an AII could manufacture an insurance product, the requirements in PROD 4.2 would apply. Also, PROD includes some additional stricter requirements above the IDD minimum which apply to all firms.

PROD 4.2.14 R

Manufacture by more than one firm

 

PROD 4.2.25R

Product testing

 

PROD 4.2.32R

Distribution channels and information disclosure to distributors

 

PROD 4.3.3R

Distribution of insurance products

 

Supervision manual (SUP)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

SUP 10A (and APER and FIT)

FCA Approved persons

 

We are maintaining these pre-IDD requirements. They apply to an incoming EEA firm with an establishment in the UK that is not a Senior Managers and Certification Regime (SMCR) firm, but the applicable controlled functions are limited.

SUP 10C

FCA senior managers regime for approved persons in SMCR firms

 

We are maintaining these pre-IDD requirements. They apply to EEA SMCR firms, but the applicable controlled functions are limited. See SUP 10C.1 (Application) and SUP 10C Annex 1 (What functions apply to what type of firm) for more details of what functions apply.

SUP 12

Appointed representatives

 

We are maintaining these pre-IDD requirements. They apply if the firm has permission to carry on insurance distribution activity and wishes to appoint, or has appointed, an appointed representative (SUP 12.1.1 R (1)).

SUP 15

Notifications to the FCA

 

We are maintaining these pre-IDD requirements. Notification requirements apply to incoming EEA firms.

SUP 16

Reporting requirements

 

We are maintaining these pre-IDD requirements. Reporting requirements can apply to incoming EEA firms. Firms should refer to SUP 16.1 to see where reporting requirements apply.

Dispute Resolution: the Complaints sourcebook (DISP)

FCA Handbook Provision

FCA Handbook heading

Relevant IDD article

Notes

DISP

Dispute Resolution

 

We are maintaining these pre-IDD requirements. They apply to a firm in respect of complaints from eligible complainants concerning activities carried on from an establishment maintained by it or its appointed representative in the UK (see DISP 1.1).

COMP

Compensation

 

We are maintaining these pre-IDD requirements. This sourcebook is principally relevant to the Financial Services Compensation Scheme (FSCS) and is included here for information. It sets out the circumstances in which compensation may be paid, to whom compensation may be paid, and on whom the FSCS can impose levies to meet the costs of paying compensation (see in particular COMP 3, 4, and FEES 6). It also describes how the FSCS calculates compensation in particular cases.