8th September 2020

The portfolio letter, signed by Roma Pearson, FCA Head of Department Retail General Insurance, details the regulator’s supervisory strategy for firms grouped by business model in its personal and commercial lines insurance intermediaries’ portfolio.  The FCA is asking recipients of the portfolio letter to consider the extent of the risks in their business and assess whether they strategies they have in place reduce those risks.

The regulator has identified customers buying unsuitable or poor value products as the most significant risk of potential and actual harm posed by firms in the portfolio.  Insufficient or unclear information at the point of sale and inappropriate sales tactics were the biggest contributors to this harm, according to the FCA.

The letter noted: ‘Robust governance and controls are essential to ensure good outcomes for customers, but they are not, by themselves, enough to prevent harm from occurring. Healthy cultures and behaviours must be embedded throughout organisations to prevent the control environment being undermined.  Improvements in firm’s cultures, governance and oversight arrangements will ultimately drive the change that we require from this market.’

Issues raised in the supervisory portfolio letter include:

  • Covid-19, firm resilience and orderly wind-down.
  • ineffective governance and oversight of businesses.
  • incentive arrangements that do not support a positive conduct culture.
  • business models which provide poor control over sales and renewals and conflicts of interest including through appointed representatives.
  • business interruption and how intermediaries can meet their customers’ information needs about the test case.
  • EU withdrawal – the actions firms need to take in order to be ready for 1 January 2021.

BIBA members are encouraged to read the letter in full and can access the document by clicking here.

The FCA said it will be engaging with a number of firms in order to fulfil its supervisory priorities.  The regulator will also write to firms again in 2021 to provide its updated view of the key risks firms in this portfolio pose, the extent to which these risks are being mitigated, and its updated plans for supervising the sector as a result.

BIBA members’ compliance and regulation queries should be directed to: [email protected].


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