gavin-tinch-car-care-planOur next three blogs introduce the Insurance Distribution Directive (IDD), the EU’s latest legislation for the insurance market, which replaces the Insurance Mediation Directive (IMD). We provide an overview of the main changes and take a closer look at the Insurance Product Information Document (IPID), the replacement for the Policy Summary Document.

With our blogs focussing on the IPID, a pre-contractual, stand-alone document that all insurance retailers must present to new customers, we spoke to Car Care Plan’s Head of Compliance, Gavin Tinch, to delve deeper into the other changes introduced by the IDD.

In the first of a three-part interview, Gavin gives us background information on the IDD and explains new rules surrounding Continuing Professional Development.

What is the Insurance Distribution Directive?

The Insurance Distribution Directive is EU legislation, which sets regulatory requirements for firms designing and selling insurance products. It aims to enhance consumer protection when buying insurance – including general insurance – and to support competition between insurance distributors by creating a level playing field.

Like the IMD, the IDD covers the authorisation, passporting arrangements and regulatory requirements for insurance intermediaries.  However, the application of the IDD is wider, covering organisational and conduct of business requirements and introducing requirements in new areas, including product oversight and governance.

And when does it become effective?

The IDD is effective from 1st October 2018. It brings in some fundamental changes to the rules surrounding insurance distribution within the UK and applies to any firm that sells, advises on or concludes insurance contracts.

Where should we look for more information?

The link allows you to view the FCA handbook, as it will look at 1st October 2018, including all the changes brought about by the IDD. This link may be of interest to the person responsible for compliance within your business.

Where can we get help in understanding what we should be doing?

Car Care Plan is committed to helping its partners establish compliance with the new requirements. If we can be of any assistance, or if you have any questions, please do not hesitate to contact us via email to Compliance@CarCarePlan.co.uk.

Alternatively, if you are an appointed representative then you should be receiving further guidance from your principal firm on their expectations surrounding the new or updated rules.

What are the rules surrounding Continuing Professional Development?

The Directive introduces the requirement for all staff involved in the distribution of insurance to undergo a minimum of 15 hours Continuing Professional Development (CPD) per annum.

Under the new rules, firms must, including in relation to the relevant employee, demonstrate compliance with the following professional knowledge and competence requirements:

  1. minimum necessary knowledge of terms and conditions of policies offered, including ancillary risks covered by such policies;
  2. minimum necessary knowledge of applicable laws governing the distribution of insurance products, such as consumer protection law, relevant tax law and relevant social and labour law;
  3. minimum necessary knowledge of claims handling;
  4. minimum necessary knowledge of complaints handling;
  5. minimum necessary knowledge of assessing customer needs;
  6. minimum necessary knowledge of the insurance market;
  7. minimum necessary knowledge of business ethics standards; and
  8. minimum necessary financial competence.

This CPD could include e-learning modules, classroom-based training, individual coaching and development, online product knowledge assessments, external training, conferences, etc.

The key is to establish appropriate systems and processes to log the development and to ensure any individual who has not completed the required 15 hours CPD in a 12-month period is stopped from conducting insurance distribution activities until the CPD requirement is achieved.

Click the link to access the relevant section of the FCA handbook.

The immediate challenges

  1. Identifying who is directly involved in insurance distribution, including those within the management structure responsible for the firm’s insurance distribution activities or responsible for the supervision of a relevant employee who is directly involved in insurance distribution.
  2. Designing a development plan to satisfy the minimum 15 hours CPD requirements, ensuring the development fits within one of the FCA’s professional knowledge and competence requirements, as detailed previously.
  3. Introducing a method of logging the development completed by the employee; and establishing a method to stop any employee that has not completed the required CPD from being involved in the distribution of insurance.

Keep an eye out for Part Two of our interview with Gavin by signing-up to our newsletter here or you can follow our company LinkedIn page here.