MGAs and insurers are urged to chase brokers as Consumer Duty deadline looms

This will mean ‘manufacturers’ should have all the relevant information to assess the product value by 30 April.

However, one of the biggest problems is that ‘distributors’ – which includes brokers – have not handed in the relevant information to insurers and managing general agents.

The market associations agreed to the format and agreed the questions that firms should be asking, but not everybody has used those formats and/or have added further question sets.

Kenneth Underhill

In January, Ecclesiastical released the findings of a survey which found that only just over half (53%) of brokers were aware of the Financial Conduct Authority’s new Consumer Duty rules.

Kenneth Underhill, director at compliance consultancy ICSR, said he knows cases where insurers have sent out 3,000 requests, only to receive back 1,000 responses.

Underhill stated: “One of the problems is that the manufacturers of products, the MGAs and insurers, have all asked for different information. There are lots of them.

“If you're a small broker, you might have received 20 or 30 or more requests for information.

"Not all of them are in the same format, or they or ask for the same information and not all of them require the same form of response. Some are in Excel spreadsheet, some are in Word documents.

“The market associations agreed to the format and agreed the questions that firms should be asking, but not everybody has used those formats and/or have added further question sets. It's been quite a disaster.”

Consumer Duty deadlines 

The FCA has set a series of rolling deadlines for Consumer Duty up until 31 July 2024. The next big one is when the FCA expects all insurance firms to be ready for the final Consumer Duty deadline.

Underhill believes the FCA will pressure the manufacturers to ensure the timelines are hit, as it is easier than chasing down thousands of disparate distributors.

Confusion

Matthew Cranny, compliance and training executive at Create Solutions, said brokers should already be in compliance with the Consumer Duty deadlines, as it was part of product governance and fair value agenda – under PROD four – which finished in September 2022.

The biggest area of confusion is that a lot of firms think it does not apply to commercial business when it does.

Branko Bjelbaba

Compliance consultant Branko Bjelobaba said that although brokers should already have been in compliance, many were not up to date.

Bjelobaba observed: “The biggest area of confusion is that a lot of firms think it does not apply to commercial business when it does. The only exclusion is for large risk firms, so you are talking about corporate staff and group commercial, where there’s more than 200 employees when someone buys private medical insurance.”

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