The Insurance Distribution Directive (IDD) will replace the Insurance Mediation Directive (IMD) in February 2018. Over the last ten years the FCA has gone over and above the IMD requirements to create the most mature conduct regulatory framework in Europe. To date, however, across the rest of the EU, IMD application has been softer and inconsistent. The IDD raises the bar significantly from IMD, and it is expected this time round European implementation will be stricter.
On 19 January 2018 the FCA released its third and last Policy Statement on the Insurance Distribution Directive (IDD) containing near-final rules. European legislation on IDD was finalised by the end of 2017. The application date for firms has now been delayed until 1 October 2018 following widespread support in Europe for delayed implementation. As a result, the FCA will be putting in place a formal transition period so that firms may adopt some or all of the new IDD requirements early if they are ready to do so.
The IDD is a new EU wide directive aimed at ensuring minimum harmonisation of insurance distribution regulation across the EU, creating a ‘level playing field’ for insurance intermediaries and insurance distribution, regardless of the channel customers use to purchase their products. The aim is to ensure consistent prudential standards for intermediaries as well as significantly raising conduct standards, improving consumer protection and effective competition. The IDD applies to insurers, insurance intermediaries, price comparison websites/aggregators and ancillary insurance intermediaries. The conduct requirements applying to distributors (which includes insurers) vary according to the nature of the business, customers (including commercial clients) and distribution channel used.
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