18 October 2022
LMA publishes Consumer Duty guidance for managing agents
Consumer Duty implementation simplified by previous application of FCA rules to the insurance industry, says LMA.
- The LMA today published a general guidance document for the implementation of the FCA Consumer Duty.
- Previous implementation of FCA initiatives means the market is well prepared for the required changes, says the LMA.
- The first Consumer Duty implementation deadline falls on the 31 July 2023.
The Lloyd’s Market Association (LMA) today announces the publication of a general guidance document for the implementation of the FCA Consumer Duty (the ‘Consumer Duty’).
To support the work of managing agencies in the Lloyd’s market in implementing the FCA Consumer Duty, the LMA had established a Consumer Duty Working Group, a sub-group of its main Conduct Committee. The guidance document is the first product of this working group.
The Financial Conduct Authority (FCA) has gradually introduced the new Consumer Duty over the past year in a series of policy announcements. The Consumer Duty sets standards of care that firms are required to give retail customers. The FCA expects enhanced standards of consumer protection by requiring firms to ensure that their products and services are fit for purpose, offer fair value, and help consumers make effective choices. The Consumer Duty is a regulatory duty rather than imposing any new legal duty of care.
The Consumer Duty identifies the following four areas where the FCA wishes to see good outcomes for retail customers: products and services, price and value, retail customer understanding and customer support. The Consumer Duty also applies rules which cut across those four outcomes as follows: act in good faith, avoid causing foreseeable harm and support customers to pursue their financial objectives.
The market has already implemented the Insurance Distribution Directive (IDD), which imposed rules requiring firms to act in their customer’s best interests. More recently, the market implemented the FCA’s General Insurance Pricing Practices and Fair Value assessments, enhancing product oversight and governance. As a result of this, insurers are in most cases already complying with many of the new Consumer Duty requirements, especially the requirement to ensure fair value.
Arabella Ramage, legal director at the LMA, said: "The Lloyd’s market is in a strong position to implement the additional requirements imposed by the FCA Consumer Duty, and the LMA is ready and primed to provide support. As a market, we have a long history of adapting to regulatory environments and maintaining the highest standards of policyholder protection.
"Given the prior implementation of the Insurance Distribution Directive, insurance is perhaps in a better position than many other financial services in terms of already applying the principles of the new Consumer Duty, and we will be providing further detailed guidance for Managing Agencies over the coming months.
"Nevertheless, the LMA, on behalf of its Members, will continue to engage with the FCA throughout this implementation period, provide market feedback and seek clarifications where necessary. If any of our Members have questions about Consumer Duty implementation, do not hesitate to contact Steve Morrell who has been leading this work at the LMA."
The full guidance document is available here.
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Notes to Editors
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