IDD and T&C


IDD and T&C

To those people who provide advice on general insurance products such as critical illness, life assurance and insurance-based investment products, the forthcoming changes to T&C requirements are something that you need to be aware of.

From the Insurance Mediation Directive (IMD) to the Insurance Distribution Directive (IDD)

Acronyms abound! The IMD will be replaced by the IDD from 1st October 2018. This introduces an updated EU-wide ‘level playing field’ for insurance distribution. This applies to all regulated firms: insurers, aggregators and importantly, anyone who provides advice on ‘insurance’.

In simple terms, ‘insurance’ is anything that is covered under the FCA ICOBS rules. As I mentioned earlier, this includes the likes of critical illness, term, mortgage protection, and income protection insurance. Any retail investment adviser who advises on protection from time to time, will also fall under these rules.

What are the changes?

The IDD introduces a number changes covering disclosure requirements, inducements, advised and non-advised sale standards and complaints. These extend the current ICOBS requirements.  They also introduce changes to the current T&C regime: anyone who advises on insurance products will need to meet them.

T&C changes

Under IDD, all staff involved in insurance distribution must have the appropriate knowledge and ability to perform their duties.  This is, of course, something that we are all familiar with within financial services. Note that this says all staff so this includes those who are already subject to T&C requirements because they provide advice, and others who aren’t currently covered by T&C because they don’t. This will also impact on those who supervise those that provide advice on insurance.

Specifically, the IDD requires the completion of at least 15 hours of relevant CPD.  This can be structured or unstructured.

For those in Financial Services, three specific areas must be covered by the CPD;
1. the insurance market, laws, new products, taxation and state benefits;
2. claims handling, complaints handling, assessing customer needs, appropriate financial competency; and
3. business ethics standards/conflict of interest management.

In each area, the CPD content should cover generic core knowledge, product-specific knowledge, and terms and conditions.

There has been relatively little coverage of this topic.  For a link to what the CII offer via their Insurance Assess site, click here.

What are the implications?

  1. Anyone who is already required to complete 35 hours of CPD will  need to ensure that part of this time (i.e. not in addition) is devoted to meeting the new IDD requirements.  This would apply to CF30 investment advisers, mortgage advisers and any qualified member of the CII that are involved in the distribution of insurance.
  2. The IDD requirements are there to ensure a minimum level of competence. Staff who are affected by these requirements should be able to demonstrate they are IDD competent no later than the 1st October 2018. 
  3. The supervisors of those that distribute insurance will also need to undertake appropriate CPD to meets the IDD requirements.
  4. Anyone who just advises on insurance products may have to complete 15 hours CPD as a minimum for the first time under T&C rules.
  5. T&C procedures need to be amended and there needs to be appropriate oversight of the changes.
  6. Record keeping requirements must be amended so they demonstrate that these requirements have been met.

Click here for details of our T&C services

Ian Patterson

12th September 2018

Marie Patterson
Ian Patterson