FCA proposes further regulatory cuts for insurance sector

The FCA has proposed further cuts to “unnecessary data reporting” as part of its drive to reduce the burden on firms it regulates.

Insurance Times can exclusively reveal that the regulator is seeking opinions on decommissioning REP022 (General Insurance Pricing Attestation) and Renewal and Insurance Assessment (RIA) Complaints, as well an on removing the requirement to submit nil returns for REP008 (Notification of Disciplinary Action relating to conduct rules staff – other than SMF managers).

REP022 was introduced as temporary reporting obligations as part of the FCA’s General Insurance Pricing Practices rules in 2022 to ensure firms had appropriate governance structures in place to avoid price walking. RIA Complaints refer to complaints data submissions linked to renewals.

The FCA now feels confident that sufficient data has been gathered, with ongoing supervisory work sufficient to manage these risks without regular data submissions from firms. 

REP008 is a form firms currently must use to notify the FCA of disciplinary action taken against non-senior management staff under conduct rules, with a nil return submitted when no reportable incidents have occurred. Here, the FCA proposes cutting the requirement for firms to confirm that no incidents have occurred. 

In a statement, it explained: ”We’re removing the requirement to submit nil returns for REP008 as we’ve determined that nil return submissions do not provide additional regulatory value to our supervision.” 

Deregulatory campaign

These change have been suggested as part of the regulator’s CP25/8 consultation, entitled Data decommissioning: Removing reporting and notification requirements.

This consultation has suggested the removal of regular data returns for other parts of the financial services market and has overlapped with the insurance-focused CP25/12: Simplifying the insurance rules one.

Announced last month on 14 May CP25/12 includes proposals to ditch what the FCA claimed were “outdated or duplicated requirements from its insurance rulebook”.

Plans include creating a new definition to identify large commercial insurance customers who should not be captured by its conduct rules and no longer requiring firms to review the value of their product at least every 12 months, among others. 

The FCA’s recent moves to streamline regulation follow communications from government that it would like to promote growth. In March, chancellor Rachel Reeves met regulators, including the FCA to outline her “radical plan to cut red tape” in pursuit of this goal. 

Also in March, the regulator announced that it had no plans to take forward its proposals on regulatory D&I proposals and scrapped proposed “name and shame” disciplinary practices for more companies.

Commenting on the publishing of a five-year strategy document in the same month, FCA chair Ashley Alder explained: ”We want to deepen trust in financial services and shift our collective attitude across financial services to risk.

“Too often the focus has been on the risks of a decision taken rather than the lost opportunity of taking none. We want to change that so we can spur growth and improve lives.”