Insurance conduct requirements and the Consumer Duty

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This Overview guides practitioners to key resources on insurance conduct requirements and the FCA’s Consumer Duty across scope, governance, product oversight, pricing, distribution and redress.

The Consumer Duty in PRIN 2A sets an overarching conduct standard for firms dealing with retail customers, overlaying existing requirements in ICOBS, PROD (product governance), DISP (complaints) and SYSC/SM&CR within the FSMA 2000 framework and UK implementation of the Insurance Distribution Directive. It applied to open products from 31 July 2023 and to closed products from 31 July 2024.

Key issues include scoping roles across the distribution chain (manufacturers, co‑manufacturers, distributors and appointed representatives) and evidencing compliance with the cross‑cutting rules (good faith, avoiding foreseeable harm, supporting customers’ objectives) and the four outcomes (products and services, price and value, consumer understanding, consumer support). Practitioners should address product governance (target markets, distribution strategies), fair value assessments and remuneration (including premium finance and add‑ons), communications testing, treatment of vulnerable customers, claims handling under ICOBS, and complaint handling under DISP.

Governance and MI are central: firms should produce board reports, designate a Consumer Duty champion, undertake annual assessments, and remediate gaps. Outsourcing...

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