HM Treasury has published a consultation paper and draft statutory instrument on the transposition of the Insurance Distribution Directive (2016/97/EU) (IDD) into UK law. The Government plans to implement the IDD into UK law by 23 February 2018. Accordingly, responses are invited to the proposals set out in the drat statutory instrument by 22 May 2017.
How does the UK Government intend to approach the IDD?
As the IDD is a minimum harmonising directive there are some areas where the Government has decided to continue the approach taken to the sale of insurance products in the UK.
- The Government intends to continue to exclude life and liability products from the exemption from scope for connected contracts of insurance (continuing the approach under the Insurance Mediation Directive (2002/92/EC) (IMD).
- The IDD connected contracts exemption extends to cover for the “non-use” of services. The Government intends to include this exemption for the UK market.
- The Government will not seek to impose any time limitation for products under the connected contracts exemption (the IMD was limited to products of no more than 5 years).
- The disapplication of the connected contracts exemption in relation to travel contracts sold as a package will not be changed and the Government plans to continue to regulate travel sold as an add-on beyond the scope of EU law.
- Importantly, the IDD removes “introducing” as an activity that will require authorisation. Accordingly, the Government seeks to de-regulate the activity of merely passing on information about a policyholder to an insurer or the details of a policy to a potential insured (the activity largely undertaken by Introducer Appointed Representatives). However, where a firm does anything more than merely provide information they will continue to require authorisation under UK law.
An annex contains a draft statutory instrument (Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2017) on the changes to the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.