Simplifying the Insurance Rules Mike Allison Director of Protection Paradigm Protect Introduction This update will be relevant to any firm involved in the distribution of noninvestment insurance products covered by the Insurance Distribution Directive (IDD) rules. As a reminder, this covers general insurance, such as home and car insurance, insurance based investment products, such as investment bonds and endowments and long term insurance contracts, such as term assurance, critical illness cover and income protection. The FCA has published PS25/21 Simplifying the insurance rules. This work forms part of their efforts to ensure more proportionate regulation and reduce regulatory burden, particularly now the Consumer Duty is in force. The changes outlined in this paper come into force with immediate effect. Minimum knowledge, training and competence requirements The FCA has removed the annual 15-hour continuing professional development (CPD) requirement for those who are involved in the distribution if IDD business. The removal of a regulatory mandated number of hours is designed to give firms more flexibility to decide the threshold of CPD that is appropriate to their firm and individual employees in order to evidence their competency to be involved in the distribution of this type of business. The FCA has made it clear that this is not a relaxation of overall competence and training expectations. Firms are still required to ensure their employees maintain an appropriate level of CPD activity to maintain their skills, knowledge and competence in order to perform their role. The FCA Handbook does not state a minimum number of CPD hours for mortgage advisers, unless the individual is a financial adviser that advises on mortgages, in which case 35 hours CPD applies. However, as mortgage advisers require a qualification, the professional bodies providing the qualification are likely to set their own minimum CPD requirements which may typically be at 35 hours per year. Following this change, where an employee is a member of a professional body, such as the CII, they are still subject to minimum CPD requirements of the professional body. Mortgage advisers or insurance advisers advising on insurance, protection or GI, are likely to have CPD requirements exceeding 15 hours, given the nature of their role and the requirement to demonstrate competence. Some firms may have individuals with limited involvement in insurance distribution activities, such as passing leads to a colleague. This change is likely to affect these roles, as firms will be able to tailor CPD requirements to the individual and ensure they are proportionate for their role, rather than applying a blanket minimum number of CPD hours. 12 SPRING PROTECT NEWSLETTER
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