Selected recent news from the UK's conduct regulator: 

On 29 September, the FCA published a third consultation paper on the implementation of the Markets in Financial Instruments Directive (MiFID) II (effective from 3 January 2018). The proposals include changes to disclosure and product governance. It is noteworthy that the regulator has "not proposed applying MiFID II conduct rules to insurance-based investment business and pensions in this CP" and "will return to this subject when [the FCA] consult on implementing the IDD in 2017".

On 28 September, the FCA published a policy statement setting out the final rules on regulatory references. A new chapter, SYSC 22, will be inserted in the FCA Handbook and the Supervision manual is updated to contain revised Forms. The full rules apply to Solvency II firms and large non-Directive firms with fewer requirements for small non-directive insurance firms and FCA only-authorised firms. The rules will come into force on 7 March 2017. These have been published alongside corresponding PRA publications (see UK Insurance: PRA (3 October 2016)).

On the same date, the FCA published consultation paper CP16/27 proposing to extend the application of the Code of Conduct sourcebook (COCON) to standard (those not subject to pre-approval) non-executive directors (NEDs) in insurance firms. NEDs do not meet the definition of "employee" in FSMA. FSMA was changed to allow the FCA to apply conduct rules to any of the directors of a firm. COCON is formed of five individual and four senior managers conduct rules. The proposals will come into force two months after the final rules are confirmed in Q2/Q3 2017.

Other papers published on 28 September were a discussion paper on the legal function and various feedback statements. The feedback statements follow their review of grandfathering notifications and the corresponding Statements of Responsibilities (SoRs) and management responsibilities maps. Whilst primarily concerning firms in scope of the SM&CR, these papers, the feedback in particular, may be of interest to firms that the SM&CR will be extended to including insurers*. 


* Generally in the Digest, "insurers" is an umbrella term for insurance firms and friendly societies.

David Gray

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David Gray
Consultant Actuary

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