On 19 November 2019, the FCA published its finalised guidance on the general insurance (GI) distribution chain (FG19/5). https://www.fca.org.uk/publication/finalised-guidance/fg19-05.pdf
The guidance, addressed to GI firms and providers, gives further clarity on what the FCA expect firms to do in the GI and pure protection sector.
In particular, it explains how firms should consider the value that the product and distribution arrangements present to the customer.
All parties are now responsible for everything, and that is what is driving the paranoia of due diligence reports, intensive applications for agencies that involve in depth compliance reports and interviews, and it is driving a more centralised model where product providers own the distribution.
Firms must put in place a product approval process, covering product design and review
As part of this process, we expect manufacturers to consider the value that the product presents for its intended customers (the target market) and how the distribution chain
affects overall value.
" Manufacturers have an obligation to ensure the distribution strategy is consistent with the identified target market."
That means that the providers must create a biz plan and they pretty much need your name on it.
In business we all try and take advantage of change, and the implications here are clear.
The small-inde label is under pressure as never before, and the tide is moving towards a tie to a selected range of providers.
There are key examples of situations which are directly relevant to all financial services
FCA say where firms should be particularly vigilant are: