The new Insurance Distribution Directive (IDD) came into effect on the 1st of October 2018, and regardless of regulatory status, all dealers are now subject to this new regulation.
Jackie Crookes FISC’s Compliance Manager highlights the key changes:
Demands & Needs – The rules for establishing demands and needs are further enhanced and an interactive assessment of customer needs must be carried out. Products must match a customer’s insurance demands and needs and there must be a personalised explanation to the customer of why the product is suitable and why it meets the customer’s needs.
Continuing Professional Training & Development – All employees directly involved in insurance distribution e.g. sales, claims handling, those responsible for the supervision of those directly involved in insurance distribution and management, including Company Boards with responsibility for insurance distribution activities, are required to complete a minimum of 15 hours of CPD (Continuing Professional Development) per year. This must demonstrate appropriate knowledge and ability to perform duties adequately according to role and there must be appropriate records to demonstrate this. The regulator may ask to see these records.
Insurance Product Information Document (IPID) – The IPID (Insurance Product Information Document) replaces the requirement to provide a policy summary or key features document for general insurance contracts. The IPID is a standardised document and must be received by the customer as early as possible to enable them to make an informed decision.
Customer’s Best Interests – Underpinning the IDD is the customer’s best interests principle…..remuneration and performance management of employees must not conflict with the duty to act in the customer’s best interests. Firms must be proactive in evidencing how they consider the best interests of customers and be seen to be actively working in the best interests of customers. Emphasis on TCF and an increased focus on culture should help firms in demonstrating compliance with these requirements.
“Existing users of FISC’s FCA Tracker and E-Learningonline systems can be reassured that they have been updated to ensure that they assist firms in proactively demonstrating compliance with all of the new IDD requirements”
If you would like to learn more about how FISC can assist you in meeting the new IDD requirements, please contact us.