The Financial Conduct Authority (FCA) has set out further proposals for simplifying insurance and funeral plan requirements while maintaining appropriate consumer protection.
The plans are part of wider efforts to streamline rules and reduce complexity for firms, and follow final rules published in December last year.
In a consultation running until 4 September, the FCA is seeking feedback on five key areas: narrowing the scope of rules for non-UK businesses, removing unnecessary disclosure requirements, increasing flexibility in means of disclosure, simplifying rules for advised sales of insurance products, and amending rules for professional indemnity insurance (PII).
“We continue working with stakeholders to make sure our rules strike the right balance between appropriate protections for consumers and supporting innovation and growth”, the FCA said.
Cormac Bradley, senior actuarial director at independent financial consultancy Broadstone, said the proposals represent a shift towards a more principles‑based regulatory framework and will reduce unnecessary complexity.
He explained: “The optional nature of many of the changes is particularly welcome, avoiding unnecessary implementation costs.
“Aligning the territorial scope of ICOBS and PROD 4 more closely with genuine UK customer connections should materially reduce duplication for international insurers and intermediaries. Stepping back from detailed, prescriptive requirements and relying more on high‑level frameworks such as the Consumer Duty and SYSC should make the UK a more attractive base for cross‑border insurance business.
“The proposals to streamline disclosure requirements are also significant. Removing elements such as ICOBS 4.2 and other low‑value disclosures recognises the reality that length boilerplate does little for customer understanding. A more flexible approach to communication, particularly through digital channels, better reflects how customers engage today, while reducing reliance on costly paper‑based processes.
“Importantly, the FCA has avoided introducing a ‘local regulatory backstop’, which would have risked reintroducing complexity and uncertainty. However, striking the right balance on disclosure simplification will be key and industry feedback ahead of the 4 September deadline will be critical in ensuring consumer understanding is not diluted.
“Taken together, these reforms are part of a broader direction of travel, moving away from rigid rulebooks towards more flexible, outcome‑focused regulation. While the full benefits will emerge cumulatively across the FCA’s wider simplification agenda, this package goes to the heart of how firms engage with customers in a clearer, more modern and proportionate way.”
