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FCA Publishes Feedback Statement Setting Out Plan of Action for Reviewing its Requirements

Briefing
07 May 2025
5 MIN READ
1 AUTHOR

The FCA has published a feedback statement1 which sets out what it describes as an “ambitious programme of action” that it will take to simplify its requirements of firms. This work follows what the FCA recognises as longstanding concerns from firms about the length and complexity of its rules and guidance.

Through its programme of action, the FCA is aiming to achieve the following outcomes:

  1. More flexibility – through enabling firms to innovate and take advantage of technology, and to tailor approaches to customers’ circumstances, particularly those with characteristics of vulnerability.
  2. More predictability – through providing more clarity on the FCA’s priorities and upcoming consultations to help firms plan.
  3. Improved efficiency – through reducing the time, cost and complexity involved in meeting the FCA’s expectations, while still ensuring good customer outcomes.

The feedback statement is relevant to all financial sector firms. However, as part of its programme of action, the FCA is proposing to take certain actions specific to the insurance sector, including:

  1. Reviewing the international application of its conduct rules, starting with a review of the insurance sector. This review will examine whether conduct rules, such as those under the Consumer Duty, should apply to firms serving customers outside the UK, when at the same time they have to adhere to international obligations.
  2. Reviewing Handbook definitions, including the definitions relating to retail customers and small and medium-sized enterprises (SMEs). In particular, the FCA will consult on definitions currently used in rules specific to the insurance sector to determine which SME customers need protecting under the rules applying to retail customers.
  3. Reviewing the reporting requirements that were introduced under the FCA’s general insurance pricing practices intervention.
  4. Consulting on the rules for insurance and funeral plans following the FCA’s discussion paper on the regulation of commercial and bespoke insurance business which set out proposals for better aligning the balance between safeguarding small commercial customers and retail consumers with encouraging greater competitiveness.

In addition to the actions which are specific to the insurance sector, the following proposals are also likely to interest insurance firms:

  1. consulting on updating the requirements in the FCA’s Client Assets sourcebook;
  2. clarifying rules on product governance and fair value to provide more clarity on how rules on product governance and fair value in the Consumer Duty interact with each other and those elsewhere in the Handbook;
  3. clarifying the application of the Consumer Duty through distribution chains;
  4. clarifying the FCA’s position on the relevance of historic supervisory communications, including Dear CEO Letters; and
  5. exploring options for reviewing the Senior Management Arrangements, Systems and Controls Sourcebook.

The proposals from the FCA are likely to be welcomed by firms. When consulted on their views, firms said that the FCA, amongst other things, should:

  1. clarify the interaction between sectoral requirements and the Consumer Duty and/or wider legislation/regulations;
  2. improve the drafting and navigability of the FCA’s rules; and
  3. remove rules that cover similar ground.

The FCA has stated that it will seek further input on the action plan set out in its feedback statement, and will share an update on its work in September 2025.

Footnote

  1. FS25/2
Main Bulletin
Insurance Bulletin May 2025