The FCA has issued a ‘Dear CEO’ letter regarding its concerns that some firms “have failed to understand the impact of the enhanced product governance rules on their business,” raising concerns about potentially harmful outcomes for consumers.
Enhanced rules on product governance came into effect on earlier this month on 1 October 2021. These will apply to manufacturers and distributors of all general insurance or pure protection products (except large risks or reinsurance contracts). The rules on pricing for home and motor insurance, auto-renewal cancellation, premium finance disclosure rules and reporting requirements will come into force on 1 January 2022.
The FCA conducted a market survey in August 2021 to assess the readiness of firms to comply with the rules.
The ‘Dear CEO’ letter outlines the actions the FCA expects firms to take, which are:
- to establish whether they are a manufacturer or distributor of general insurance or pure protection products (excluding contracts of large risks or reinsurance contracts)
- to assess the impact of the enhanced product governance rules on their business
- to take the necessary steps to ensure compliance with the enhanced rules which came into
- effect 1 October 2021
- to notify the FCA under SUP15.3.11R of any breach of FCA rules.
Where any shortcomings are identified, firms are expected to act promptly to address these.
The letter also provides an update on the Senior Manager Attestation requirement. The FCA expects to issue the first attestation form via Qualtrics to all general insurance firms and credit premium finance providers in early January 2022.
If you need advice on the ‘Dear CEO’ letter, or would like support with ensuring you are compliant with the enhanced product governance rules, RWA can help. Please contact your RWA Business Manager or email email@example.com.