Fair value earmarked to be the key focus of the FCA for 2021
The start of a new year is always a good time to look forward so we asked UKGI’s compliance experts to give us their thoughts on what compliance issues might most impact brokers in 2021. In their view there is one overarching theme and that’s fair value.
- Fair value continues to be an FCA focus: whether it’s the intrinsic value of an insurance policy, value in relation to remuneration earned in the chain or the end price of the product to the customer in relation to benefits.
The FCA’s ‘General insurance pricing practices market study’ Consultation Paper (CP20/19) is a must read: there are some potentially significant changes proposed and the paper has generated a lot of debate in the industry. Proposals include:
New reporting requirements for brokers on motor and household (including add-on products, premium finance and APRs)
Extra reporting requirements if you’re an insurer or price-setting intermediary
Significant new product value requirements in the product governance sourcebook (PROD) applying to pretty much all products and impacting both distributors and manufacturers
Changes to auto renewals
New rules to tackle price walking - designed to ensure that renewals are not priced higher than new business
Fair value is definitely a key regulatory focus for 2021, we’d recommend brokers have a look at the Consultation Paper and, if you’ve got compliance support, contact your consultant for a chat about the potential implications for your business.