FCA strips back insurance rulebook

As thousands of brokers gather today (14 May) in Manchester for Biba’s A New Era conference, the regulator has published a consultation paper containing proposals to create a new definition to identify large commercial insurance customers who should not be captured by its conduct rules.

We are stripping back our insurance rulebook by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.

Matt Brewis, director of insurance at the FCA

According to the watchdog, this would ease the burden on firms insuring larger businesses that can manage risks independently, while protecting smaller commercial customers.

The regulator is also proposing:

• No longer requiring firms to review the value of their product at least every 12 months. Instead, firms would use the risks and characteristics of each product to decide how often they review them.
• Giving firms flexibility to appoint one lead insurer to comply with its rules in instances where more than one party is involved in designing the insurance product.
• Broadening the scope of bespoke contract exclusions and making them easier for all insurers and brokers to use. Bespoke contracts are built to suit one customer upon that customer’s request, which means they automatically have the protections product governance rules provide.
• Getting rid of duplicative annual reporting and employer’s liability notification requirements.
• Removing the specified minimum hours of training and development required for insurance and funeral plan employees.

The regulator has pushed ahead with the proposal to ditch continuous professional development requirements despite the Chartered Insurance Institute raising concerns and stating their members will have to continue to complete 15 hours’ ongoing training every year.

Commenting on today’s consultation paper, Matt Brewis, director of insurance at the FCA, said: “We are stripping back our insurance rulebook by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.

“We have listened to industry, and we are taking action – in doing so we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers.”

As part of the consultation, the regulator is also inviting views on whether it should limit the scope of some rules to UK customers.

The ripping up of the regulator’s rulebook comes after the Association of British Insurers and Biba repeatedly urged the government and regulators to grab Alexander the Great’s sword and slash through what the former’s director general Hannah Gurga called the Gordian knot of regulation.

Following Gurga’s remarks at the ABI Annual Dinner at the end of last year, Nikhil Rathi, CEO of the Financial Conduct Authority, kicked off this year by writing to Prime Minister Sir Keir Starmer and promising growth would be a “cornerstone” of the regulator’s strategy through to 2030.

Rathi committed to withdrawing more than 100 pages of outdated guidance in a bid to streamline the FCA’s rules, reduce burdens on businesses, and improve outcomes for consumers after the introduction of the Consumer Duty.

The FCA is asking for feedback on the proposals published today by 2 July 2025.