FCA issued discussion paper on whether its rules appropriately balance customer protection and competitiveness in commercial and bespoke insurance business.
At same time UK FCA issued call for input on possible removal of rules, see #221194.
On same day UK FCA issued first report on competitiveness objective, see #221191.
All of above form part of FCA's aim to reduce burdens on firms and support growth.
Background
Common practice in market to make distinction between personal lines (sold to individuals for personal needs), commercial lines (businesses, corporate customers).
FCA's rules extend protections normally given to consumers to some commercial customers, many insurance products are only relevant to one customer category.
Presents a challenge to FCA in ensuring that customers in commercial insurance market are protected appropriately, while not placing unnecessary regulation on firms.
Discussion Paper
The regulator invites feedback on whether current FCA rules strike an appropriate balance between safeguarding those customers who need regulatory protections and competitiveness in the commercial non-investment general insurance market.
FCA believes there may be changes which can be made to better align this balance.
Paper discusses application of rules to commercial insurance market, especially point at which some rules are disapplied due to size and nature of commercial customer.
Rules which apply to situations where multiple firms are responsible for manufacturing insurance products, if these should apply to retail market as well as pure protection.
And discusses rules which apply to tailor-made (bespoke) insurance contracts.
Effectiveness
The closing date for submission of responses to the discussion paper is Sep. 16, 2024.
FCA will consider responses and decide if there is a case for making changes to its rules and guidance, if so it will then consult on any changes in the normal way.