"Consumer Duty is still in its infancy, and many firms are falling well short of the high bar that these new rules set. Removing old rules still feels a little premature, with the FCA seemingly scrambling to meet the Government’s deregulatory agenda."
- James Daley, managing director of Fairer Finance
The Financial Conduct Authority (FCA) has announced intentions to strip outdated or duplicated requirements from its insurance rulebook. Matt Brewis, director of insurance at the FCA, noted this decision is part of its drive to become a “smarter regulator and support growth.”
“We have listened to the industry […] we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers,” he said.
The industry watchdog has proposed the creation of a new definition to identify commercial insurance customers who shouldn’t be captured by its conduct rules. According to the FCA, this would ease the burden on firms insuring larger businesses that can manage risks independently, while protecting smaller commercial customers.
Furthermore, the regulator has proposed that firms should no longer be required to review the value of their product every twelve months, as a minimum. Instead, firms would use the risks and characteristics of each product to decide how often they review them.
The FCA has suggested giving firms flexibility to appoint one lead insurer to comply with its rules in instances where more than one party is involved in designing an insurance product, as well as scrapping duplicative annual reporting and employer’s liability notification requirements.
Removing specified minimum hours of training and development required for insurance and funeral plan employees, and broadening the scope of bespoke contract exclusions (bespoke contracts are built to suit an individual customer upon that customer’s request) have also been put forward.
The FCA has asked for comments on these proposals by the 2nd July 2025.
Criticising the FCA’s decision, James Daley, managing director of Fairer Finance, said, “While we agree with the regulator removing duplication in its rulebook – and agree that Consumer Duty supersedes many of the old rules – this is undoubtedly a fragile moment for the consumer protection landscape.”
He stressed the importance of replacing any rules it removes with “very clear guidance around its expectations. There is a danger that some firms will sense that the pressure is off – and will see this as a moment to halt the progress that the Duty demands.”
“Consumer Duty is still in its infancy, and many firms are falling well short of the high bar that these new rules set. Removing old rules still feels a little premature, with the FCA seemingly scrambling to meet the Government’s deregulatory agenda,” James added.
Meanwhile, Alex Bertolotti, insurance leader at PWC, considered the FCA’s move to simplify the rulebook for insurers a “welcome step in advancing the UK’s competitiveness agenda, building on the direction set in its five-year strategy.”
He said: “While proposals to ease the compliance burden – including changes to Consumer Duty scope and reporting requirements – will be well received, the most significant impact is likely to be felt in the commercial space, particularly through the widened carve-out for commercial products.”
“For retail and small & medium-sized enterprise (SME) markets, changes may be more limited and nuanced. But firms shouldn’t lose sight of the fact that regulatory simplification doesn’t change expectations: delivering good outcomes for UK customers will remain a priority for the FCA,” Alex concluded.
