SYSC 19F.2 IDD remuneration incentives
Application
1This section applies to insurance distributors carrying on insurance distribution activities from an establishment maintained by it, or its appointed representative, in the United Kingdom.
[Note: article 7(2) of the IDD]
2This section does not apply to an authorised professional firm with respect to its non-mainstream regulated activities if:
- (1)
the firm’s designated professional body has made rules which implemented3 article 17(3) of the IDD;
- (2)
those rules have been approved by the FCA under section 332(5) of the Act; and
- (3)
the firm is subject to the rules in the form in which they were approved.
Remuneration and the customer’s best interests
- (1)
1Insurance distributors must not:
- (a)
be remunerated; or
- (b)
remunerate or assess the performance of their employees,
in a way that conflicts with their duty to comply with the customer’s best interests rules (ICOBS 2.5.-1R, in relation to a non-investment insurance contract, or COBS 2.1.1R, in relation to a life policy).
- (a)
- (2)
In particular, an insurance distributor must not make any arrangements by way of remuneration, sales target or otherwise that could provide an incentive to itself or its employees to recommend a particular contract of insurance to a customer when the insurance distributor could offer a different insurance contract which would better meet the customer’s needs.
[Note: article 17(3) of the IDD]
Retail premium finance
4The requirement in SYSC 19F.2.2R applies to remuneration an insurance distributor receives in relation to retail premium finance.
4ICOBS 6A.5 includes further guidance on remuneration in relation to retail premium finance.