Introducer Appointed Representatives (IARs) and the Insurance Distribution Directive (IDD)

In previous articles following the IDD policy statements, we have indicated that the European Union Directive and the subsequent FCA policy statements indicated that IARs would be outside the scope of regulation.

However, in a recent meeting held between the Association of Professional Compliance Consultants (of which RWA were founder members) and the FCA General Insurance Supervision Team, it now seems that the FCA has taken a different interpretation and consider that the vast majority if not all IARs will remain in scope.

The proposed rules which can be seen in the handbook, if you use the ‘Time Travel’ facility, clearly now state that in PERG 5.6.19, it excludes General Insurance.

The following link will take you to the ‘Time Travel’ version on 1st October 2018.

It states, “But, in the FCA's view, it is very unlikely that article 33 could apply where introductions are made to a person for the purposes of that person giving advice on and then arranging general insurance.”

This seems to be a distinct change to the original stance, but the IDD was a ‘Minimum Harmonisation Directive’ so, the FCA can choose to apply a greater degree of regulation over and above the directive if it so wishes.

It is the FCA’s belief that when passing on introductions to a general insurance intermediary, the introducer is to an extent making a recommendation, albeit implied about taking out a particular policy. Also, the FCA’s view here is that the exemption isn’t in place to capture situations where the information provider is also seeking to persuade or influence the customer into purchasing a product or service aligned to his purchase which would be the subject of insurance.

For example, a motor dealer suggests that the buyer of a new car needs insurance and arranges for his broker to contact the client; in the FCA’s view the motor dealer is making an implied recommendation about the need for a particular policy, so the exclusion is not available.

Therefore, in effect, little of anything will change in the UK regulatory landscape in relation to IARs.

About the author

Terence has over 35 years' experience in the Financial Services environment, covering general insurance, investments and mortgages.

Before joining RWA, Terence worked for a large PLC insurance brokerage in Manchester, overseeing some 20 acquisitions. He served as Compliance Director at RWA from 2011 to 2018 and has worked with insurance broking firms of all sizes across the UK. He has a particular interest in Financial Crime and the protecting the insurance broker. Terence previously served as Executive Chairman of the Association of Professional Compliance Consultants (APCC), the professional body for the compliance consultancy sector.

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