The Financial Conduct Authority has set out changes to simplify insurance regulation, lower compliance costs, and keep protection in place for smaller commercial customers. More adjustments are scheduled for next year, as the regulator continues to rework its post-Consumer Duty rulebook.
The FCA said the final rules give insurers more discretion and accountability. Firms will decide how often to review products and how much ongoing professional development staff should complete, rather than follow fixed prescriptions.
Further changes are already on the agenda. Next year, the regulator plans to strip out requirements it sees as unnecessary, including a review of how its rules apply internationally and how the Consumer Duty operates in practice.
Alongside that, the FCA published proposals aimed at insurers and other financial firms that would tidy up technical rules and reduce complexity after the Consumer Duty rollout.
The list includes removing three insurance data returns, reassessing eligibility and disclosure rules for packaged bank accounts, simplifying requirements around collective investment client assets, and deleting Handbook references that no longer serve a purpose.
The regulator also outlined broader plans to help smaller firms deal with outcomes-based regulation. It intends to publish sector-specific guides, starting with consumer credit firms next year, to make expectations clearer and easier to apply.
Graeme Reynolds, director of competition and interim director of insurance at the FCA, said the changes are meant to cut regulatory costs and help insurers and brokers focus on delivering better outcomes.
He said the push for smarter regulation won’t stop and encouraged firms to keep feeding in ideas for further simplification.
The response from the London market was more guarded. Sheila Cameron, chief executive of the Lloyd’s Market Association, welcomed the FCA’s stated focus but said the announcement fell short for commercial and specialty insurers.
She said allowing a proportional approach to fair value assessments and dropping mandated training hours amounted to small, incremental steps.
Cameron said two long-running issues remain unresolved despite three years of engagement with the FCA. One is the territorial scope of the rulebook. The other is the definition of a consumer. Both, she argued, carry serious consequences for the Lloyd’s market. Clearer boundaries would cut unnecessary regulatory burden while still protecting genuine retail customers.
She said the LMA, alongside the Lloyd’s Market Group, wants those reforms delivered within the next 12 months and urged the FCA to honour earlier commitments.
Without progress on those points, she said, regulatory clarity for the London market remains out of reach.
Caroline Wagstaff, chief executive of the London Market Group, echoed that frustration. She said the market has sought clarity on what counts as a retail customer for three years, alongside the removal of non-UK business from the remit of UK regulators.
Wagstaff acknowledged movement but criticised the pace. She said policy needs to translate into change on the frontline, not just on paper.
In her view, defining a consumer underpins proportionate regulation and the government’s growth agenda. Without that definition, she said, the UK risks losing ground internationally.
She called for both the consumer definition and territorial scope issues to be resolved clearly and finally by the end of 2026.
