ICOBS 4.1 General requirements for insurance intermediaries

Application: who?

ICOBS 4.1.1R

1This section applies to an insurance intermediary.

Status disclosure: general

ICOBS 4.1.2R

Prior to the conclusion of an initial contract of insurance and, if necessary, on its amendment or renewal, a firm must provide the customer with at least:

  1. (1)

    its name and address;

  2. (2)

    the fact that it is included in the Financial Services Register and the means for verifying this;

  3. (3)

    whether it has a direct or indirect holding representing more than 10% of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer);

  4. (4)

    whether a given insurance undertaking (that is not a pure reinsurer) or its parent undertaking has a direct or indirect holding representing more than 10% of the voting rights or capital in the firm; and

  5. (5)

    the procedures allowing customers and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its customers.

[Note: article 12(1) of the Insurance Mediation Directive]

Status disclosure exemption: introducers

ICOBS 4.1.3R

A firm whose contact with a customer is limited to effecting introductions (see PERG 5.6) need only provide its name and address and whether it is a member of the same group as the firm to which it makes the introduction.

ICOBS 4.1.4G

If a firm goes further than putting a customer in contact with another person (for example, by advising him on a particular policy available from the firm) the full status disclosure requirements will apply.

Status disclosure exemption: connected travel insurance

ICOBS 4.1.5R

In relation to a connected travel insurance contract, a firm need only provide the procedures allowing customers and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its customers.2

2

Scope of service

ICOBS 4.1.6R
  1. (1)

    Prior to the conclusion of an initial contract of insurance (other than a connected travel insurance contract)2 and, if necessary, on its amendment or renewal, a firm must tell the customer whether:

    1. (a)

      it gives advice on the basis of a fair analysis of the market; or

    2. (b)

      it is under a contractual obligation to conduct insurance mediation business exclusively with one or more insurance undertakings; or

    3. (c)

      it is not under a contractual obligation to conduct insurance mediation business exclusively with one or more insurance undertakings and does not give advice on the basis of a fair analysis of the market.

  2. (2)

    A firm that does not advise on the basis of a fair analysis of the market must inform its customer that he has the right to request the name of each insurance undertaking with which the firm may and does conduct business. A firm must comply with such a request.

[Note: article 12(1) of the Insurance Mediation Directive]

ICOBS 4.1.7R

Prior to conclusion of an initial contract of insurance with a consumer a firm must state whether it is giving a personal recommendation or information.

Guidance on using panels to advise on the basis of a fair analysis

ICOBS 4.1.8G
  1. (1)

    One way a firm may give advice on a fair analysis basis is by using ‘panels’ of insurance undertakings which are sufficient to enable the firm to give advice on a fair analysis basis and are reviewed regularly.

  2. (2)

    A firm which provides a service based on a fair analysis of the market (or from a sector of the market) should ensure that its analysis of the market and the available contracts is kept adequately up-to-date. For example, a firm should update its selection of contracts if aware that a contract has generally become available offering an improved product feature, or a better premium, compared with its current selection. The update frequency will depend on the extent to which new contracts are made available on the market.

  3. (3)

    The panel selection criteria will be important in determining whether the panel is sufficient to meet the ‘fair analysis’ criteria. Selection should be based on product features, premiums and services offered to customers, not solely on the benefit offered to the firm.

Means of communication to customers

ICOBS 4.1.9R
  1. (1)

    All information to be provided to a customer in accordance with this chapter must be communicated:

    1. (a)

      on paper or on any other durable medium available and accessible to the customer;

    2. (b)

      in a clear and accurate manner, comprehensible to the customer; and

    3. (c)

      in an official language of the State of the commitment or in any other language agreed by the parties.

  2. (2)

    The information may be provided orally where the customer requests it, or where immediate cover is necessary.

  3. (3)

    In the case of telephone selling, the information may be given in accordance with the distance marketing disclosure rules (see ICOBS 3.1.14 R).

  4. (4)

    If the information is provided orally, it must be provided to the customer in accordance with (1) immediately after the conclusion of the contract of insurance.

[Note: article 13 of the Insurance Mediation Directive]