SRA approach to European Insurance Distribution Directive approved
The SRA have had their approach to dealing with the new European Insurance Distribution Directive approved by the Financial Conduct Authority (FCA) and Legal Services Board (LSB).
The Directive means that firms carrying on insurance distribution activities will need to change the way they work. Replacing the Insurance Mediation Directive, the new Directive aims to strengthen protections in place for clients, such as improving the information they receive.
Guidance on the new directive, which comes into effect from 1 October, will be made available by the SRA.
Paul Philip, SRA Chief Executive, said:
“Our changes meet the requirements of the new Directive without putting unnecessary burdens on firms. For example, in many areas our Code of Conduct already covers what is needed.
It’s important that firms make sure they are up to date with the revised requirements, so that they can provide a proper service to their clients”
Some of the key enhancements brought in by the directive and that firms will need to familiarise themselves with are:
- Professional and organisational requirements,
- Conduct of business requirements,
- Information requirements,
- Demands and needs of their client.
Firms working in personal injury, conveyancing or probate are most likely to be affected. For example, they might arrange after-the-event insurance in a personal injury matter or defective title insurance in a conveyance. There may be other insurance products that firms advise on or arrange for their clients in other areas of law.
All firms should therefore assess their own individual practices and make sure they are up to date and able to comply with the revised rules.
The SRA will be writing to a number of firms that have indicated that they carry on insurance mediation activities in their response to last year’s Financial Services Activities questionnaire.
In the meantime, the requirements of the directive can be found on the SRA website