Views on responsibility under the IDD

The implementation of the Insurance Distribution Directive (IDD) is turning out to be a long drawn out affair.

At last we know that the UK must bring the IDD into UK law by 1 July 2018 and implement its requirements by 1 October 2018.

The delay in implementation (originally scheduled for 23 February 2018) gives firms a little more time to digest the fundamental shift in regulatory responsibility which the IDD introduces.

The IDD will focus much greater regulatory attention on the responsibilities of insurers and those firms which are acting as insurance intermediaries remote from the point of sale. The IDD forces increased consideration by them of (amongst much else):-

– responsibility under proposed ICOBS 2.6 for delivery of the specified regulatory outcomes from connected contract sales;

– responsibility for all operations to be consistent with the Customer’s Best Interests Rule (proposed ICOBS 2.5);

– product design and oversight responsibilities under the proposed PROD 4 requirements;

– remuneration “down the distribution chain” and its impact on conflict of interest; and

– putting in place the systems and controls to deliver, and to evidence discharge of, the above.

These responsibilities cannot be effectively considered without a clear understanding of which firm(s) will be acting as “manufacturer” of the product. This will drive which firm is to be named on the (IDD required) Insurance Product Information Document (only one firm can be) and where responsibilities for product design and oversight will (primarily) sit.

Of course, the IDD also ups the regulatory pressure at the point of sale. The need for interactive demands and needs is a massive issue for many firms – but the key issue, which is developing on my desk, day by day, is the need for urgent and comprehensive liaison between insurers, managing agents and “scheme intermediaries” to clarify and ensure acceptance and delivery of the responsibilities I have highlighted.

If you require any more information regarding the implementation of the IDD, or would like to receive our Desk Top Guide to the Implementation of the IDD, then please contact Malcolm via malcolm@paginator.co.uk