A hub of materials to make sense of the new Insurance Distribution Directive (IDD): the backbone of UK regulation governing the distribution of all insurance products.
What is the Insurance Distribution Directive (IDD)?
The EU directive that forms the backbone of the UK regulation on general and non-life insurance, namely the contents of the Financial Conduct Authority (FCA) insurance rules. The new Insurance Distribution Directive (IDD) was passed in 2016, and replaces the Insurance Mediation Directive that came into force in 2005.
UPDATE: The European Council has delayed the application of new rules on insurance distribution to 1 OCTOBER 2018. The directive also extends to 1 July 2018 the deadline given to member states to transpose the new rules into national laws and regulations. The delay will allow the insurance industry to prepare better for the changes necessary to comply with the implementing rules issued by the European Commission.
Read our background briefing (2 pages) »
Is this not irrelevant given that the UK is leaving the EU?
No. First, the Government has stated that until Brexit formally takes place, the UK still has to fulfil its Treaty obligations by implementing existing EU regulation. Second, even if the FCA fundamental review of its handbook post-Brexit reveals some streamlining, there will be many elements of regulation that need to be retained because they either comply with international regulatory initiatives or retaining them would make it easier for businesses to operate both in the UK and the EU.
What does it mean for me?
The IDD builds on the existing insurance regulation, and introduces new requirements.
Increased to include all firms that:
- advise on;
- do admin for;
- shortlist as part of a selection process (such as price comparison websites); or
- introduce insurance.
- new professionalism requirements: all staff who are directly involved in the above activities will need to do at least 15 hours of continuing professional development (CPD) per year;
- extending the pre-contract disclosure regime will be extended to insurance undertakings; Firms must state what type of firm they are (intermediary or insurer); Firms must state whether they provide a personal recommendation;
- introduces a new category of insurance settler called Ancillery Insurance Intermediaries such as car dealers that don't sell or introduce insurance as their main business but still do so and therefore are subject to selling rules; and
- new demands and needs statements proposed insurance contracts are consistent with them. Where advice is provided, it must explain why a contract best meets the customer's needs.
Will the CII reduce its 35-hour CPD requirement for qualified members to match the 15-hour requirement for IDD?
The 15-hour requirement is meant as a minimum for anyone involved in selling insurance. However, the IDD also has a requirement that people involved in the distribution of insurance should ‘possess appropriate knowledge and ability in order to complete their tasks and perform their duties adequately’.
As a professional body, it makes sense for our standards to represent good practice rather than a legal minimum. The 35-hour CPD requirement for GI members (Cert and above):
- Embodies good practice, rather than simply minimal compliance
- It puts members in a stronger position to comply with the IDD’s more demanding requirement to ‘possess appropriate knowledge and ability in order to compete their tasks and perform their duties adequately’.
- It reflects the demands of wider roles in insurance, rather than the demands of the most basic role covered by the IDD
To find out more about the CII’s approach to CPD, see our Continuing Professional Development Scheme FAQs
How can we help?
Compliance with the IDD is down to individual firms to undertake themselves. However we can help this process with materials around the following themes:
See our background briefing setting out how the FCA intends to implement the IDD and its implications for the profession. We will keep this updated.
See our response to the FCA consultation on transposing the IDD to UK directives.
See our policy briefing on IDD negotiations at the EU level (Jan 2016).
See our response to the EIOPA consultation on general insurance knowledge and ability requirements (Sep 2013)
See our policy submission to EIOPA on general insurance practitioner knowledge and ability requirements (Nov 2012)
See our response to the original European Commission consultation on revising the Insurance Mediation Directive (Feb 2011)
Qualifications are only part of the story, as technical knowledge must be kept constantly up to date with rigorous Continuous Personal Development (CPD) requirements across the range of topics.
The CII provides a range of CPD resources »
We run a range of activities that could help fulfil CPD »
We are also working on materials to help firms meet the specific CPD requirements »
Underpinning an individual or firm's behaviour must be grounded by ethics, principles, law and regulation.
Members of the PFS comply with our Code of Ethics »
To help understand this, we have a Code of Ethics: Practical Guide »
For competence, conduct and culture to be felt by all consumers there has to be an element of consistency across all firms. We have developed a number of voluntary initiatives to do this:
Firms can demonstrate that they meet the highest standards of ethics and conduct by taking up Corporate Chartered status »
Firms that provide life, pensions and long-term savings can sign up to the 2016 Commitment setting out professional standards »
See also our other Resource Hubs:
A mark of a strong profession is one that builds knowledge and shares good practice in the public's best interests. As a professional body with over 125,000 members, the CII is ideally placed to help financial advisers and planners navigate their way through the regulatory landscape and get to grips with the business development issues that affect them the most. The Financial Conduct Authority (FCA) is a more engaging regulator than ever in sharing examples of good practice, so we can use our positive relationship and regular communications with it to relay and share our insight and experiences with the widest possible range of members.
Senior Managers & Certification Regime (SMCR) »
Insurance Act »
General Data Protection Regulation (GDPR) »