01 Jul 2018
We have published new rules for the Designated Professional Body (DPB) scheme. The scheme enables us to regulate our firms for general insurance distribution activities, on behalf of the UK Financial Conduct Authority (FCA).
These new rules are necessary to ensure our scheme complies with new requirements set out in the EU’s Insurance Distribution Directive (IDD) and the Markets in Financial Instruments Directive.
These Directives are being implemented by the FCA. Only by amending our rules accordingly, are we able to keep offering our regulatory services to firms undertaking general insurance distribution activities.
The new rules will come into effect on 1 October 2018.
What are the key changes?
Some important changes that DPB Licensed firms should note include:
Increase in Professional Indemnity Insurance (PII) cover
The minimal PII cover for DPB Licensed firms is to be increased to €1.25M for single cases and €1.85M for the annual aggregate.
New Insurance Product Information Document (IPID) requirements
DPB Licensed firms will also be required to obtain and provide their clients with an IPID. An IPID is available from the insurance provider. The firm will be required to issue the IPID together with the Demands and Needs Statement to their clients before the placement of the insurance.
Professional training and development requirement
Whilst DPB Licensed firms are not required to fulfil the 15-hour CPD requirement due to their status of Ancillary Insurance Intermediaries, firms nevertheless need to ensure that relevant staff undertake professional training and development relating to the undertaking of insurance distribution activities
The new DPB scheme rules also provide that when an insurance product is complementing another good or service which is not insurance, as part of a package or as part of the same agreement to the same Client, a DPB Licensed firm must inform the Client about the possibility of buying the different components separately.
Informing Clients about commission received
While this is not a new requirement in the rules, it is imperative that firms continue to account to Clients for all fees, commission and other benefits obtained through general insurance distribution activity. The Client must be informed in writing about the commission, which must be remitted to the Client, and only if the Client gives informed consent, in writing, allowing the firm to retain that amount of commission, can the firm keep the commission received.
If you have any questions, please contact Emma La Ferla, Regulatory Policy and Development Manager.
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