ICOBS 4.1 General requirements for insurance intermediaries and insurers

Application: who?

ICOBS 4.1.1 R 01/10/2018

This chapter4 applies to an insurance intermediary and to an insurer carrying on insurance distribution activities 4.

Interaction with the customer’s best interests rule and Principle 7

ICOBS 4.1.1A G 01/10/2018

4To comply with the customer’s best interests rule and Principle 7 (Communications with clients) a firm should include consideration of the information needs of the customer including:

(1)
what a customer needs in order to understand the relevance of any information provided by the firm; and
(2)
at which point in the sales process will the information be most useful to the customer to enable them to make an informed decision.

Status disclosure: general information provided by insurance intermediaries or insurers

ICOBS 4.1.2 R 01/10/2018

In good time before4 the conclusion of an initial contract of insurance and, if necessary, on its amendment or renewal :4

(1)
a firm must provide the customer with at least the following information:4
1. (a)
  its identity, address and whether it is an insurance intermediary or an insurance undertaking;4
2. (b)
  whether it provides a personal recommendation about the insurance products offered;4
3. (c)
  the procedures allowing customers and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its customers; and4
(2)
an insurance intermediary must also provide the customer with the following information:4
1. (a)
  the fact that it is included in the Financial Services Register (or if it is not on the Financial Services Register, the register in which it has been included) and the means for verifying this;4
2. (b)
  whether it has a direct or indirect holding representing 10% or more of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer); 4
3. (c)
  whether a given insurance undertaking (that is not a pure reinsurer) or its parent undertaking has a direct or indirect holding representing 10% or more of the voting rights or capital in the firm; and4
4. (d)
  whether it is representing the customer or is acting for and on behalf of the insurer; and4
[Note: articles 18 and 19(1)(a) and (b) of the IDD 4]
(3)
paragraph (2) does not apply in relation to a connected travel insurance contract.

Status disclosure exemption: introducers

ICOBS 4.1.3 R 01/10/2018

A firm whose contact with a customer is limited to effecting introductions (see PERG 5.6) need only provide its identity,4 address and whether it is a member of the same group as the firm to which it makes the introduction.

ICOBS 4.1.4 G 01/10/2018

If a firm goes further than putting a customer in contact with another person (for example, by advising the customer 4 on a particular policy available from the firm) the full status disclosure requirements will apply.

ICOBS 4.1.5 R 01/10/2018

[deleted]4

2 2

Scope of service: insurance intermediaries

ICOBS 4.1.6 R 01/10/2018

(1)
Where an insurance intermediary proposes or advises on a contract of insurance then in good time before4 the conclusion of an initial contract of insurance (other than a connected travel insurance contract) and, if necessary, on its amendment or renewal an insurance intermediary 4 must provide the customer with at least information on whether the firm 4:
2
1. (a)
  gives a personal recommendation 4, on the basis of a fair and personal4 analysis; or
2. (b)
  is under a contractual obligation to conduct insurance distribution 4exclusively with one or more insurance undertakings, in which case it must provide the names of those insurance undertakings 4; or
3. (c)
  1. (i)
    is not under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings; and4
  2. (ii)
    does not give a personal recommendation on the basis of a fair and personal analysis;4
  in which case it must provide its customer with the name of those insurance undertakings with which the insurance intermediary may and does conduct business.4
(2)
[deleted]4
3 3

[Note: article 19(1)(c) of the IDD 4]

ICOBS 4.1.7 R 01/10/2018

Where the firm has given information in ICOBS 4.1.6R(1)(b) and (c), then in good time before the4 conclusion of an initial contract of insurance with a consumer a firm must also4 state whether it is giving:4

(1)
a personal recommendation but not on the basis of a fair and personal analysis;4
(2)
other advice on the basis of a fair analysis of the market;4
(3)
other advice not on the basis of a fair analysis of the market; or4
(4)
just information.4

Guidance on using panels to advise on the basis of a fair analysis

ICOBS 4.1.8 G 01/10/2018

(1)
One way a firm may give advice on a fair analysis basis is by using ‘panels’ of insurance undertakings which are sufficient to enable the firm to give advice on a fair analysis basis and are reviewed regularly.
(2)
A firm which provides a service based on a fair analysis of the market (or from a sector of the market) should ensure that its analysis of the market and the available contracts is kept adequately up-to-date. For example, a firm should update its selection of contracts if aware that a contract has generally become available offering an improved product feature, or a better premium, compared with its current selection. The update frequency will depend on the extent to which new contracts are made available on the market. A firm is also required to ensure that the analysis is of a sufficiently large number of contracts of insurance available on the market (see ICOBS 5.3.3R).4
(3)
The panel selection criteria will be important in determining whether the panel is sufficient to meet the ‘fair analysis’ criteria. Selection should be based on product features, premiums and services offered to customers, not solely on the benefit offered to the firm.
(4)
Where a firm also provides personal recommendations based on a fair and personal analysis, paragraphs (1) to (3) may also be relevant to that part of the service which involves a fair analysis of the market.4

ICOBS 4.1.9 R 01/10/2018