# FCA Insurance Distribution & Consumer Duty

## Executive Summary

Anyone distributing insurance in the UK must be authorised under FSMA or operate as an Appointed Representative (AR) of an authorised principal. Beyond authorisation, firms must comply with the FCA's insurance distribution rules and the Consumer Duty outcomes framework. The good news: lead generation and introduction can be done without full intermediary permissions, which lowers SoVael's barrier to entry.

## Authorisation Routes

| Route | Timeline | Cost / Complexity | Notes |
|-------|----------|-------------------|-------|
| **Direct FCA authorisation** | 6–12 months | Material application + compliance resource | Full control; most credibility |
| **Appointed Representative (AR)** | Weeks–months | Revenue share with principal | Fastest to market; principal oversight required |

Approximately 5,600 firms hold direct FCA permission for insurance distribution. The AR route is common in digital distribution start-ups because it removes the need for an own-permissions application.

## Insurance Distribution Directive to FCA Rules

- The EU **Insurance Distribution Directive (IDD)** delegated regulations were repealed in UK law from April 2024 (PS23/18).
- They were replaced by direct **FCA Handbook rules** covering product oversight & governance, conflicts of interest, remuneration disclosure, and staff competence.
- Firms must ensure remuneration does not conflict with customer interests and conflicts must be disclosed.

## Consumer Duty

The Consumer Duty applies to insurance distribution. Firms must demonstrate four outcomes:

1. **Products & Services** — products must be designed to meet the needs of the target market.
2. **Price & Value** — customers must receive fair value.
3. **Consumer Understanding** — communications must be clear and understood.
4. **Consumer Support** — support must meet customers' needs.

The FCA 2025/26 business plan prioritises Consumer Duty enforcement, including multi-firm thematic reviews of claims handling.

## FCA Simplification (PS25/21)

- From December 2025 the prescriptive **15-hour CPD minimum** was removed and replaced with a more flexible competence requirement.
- The broader FCA direction is simplification of insurance rules while maintaining customer protection.

## SoVael's Regulatory Positioning

| SoVael Activity | Likely Regulatory Treatment |
|-----------------|-----------------------------|
| Lead generation / quote-form capture | Usually non-regulated, provided no advice is given |
| Risk gap analysis reports | Non-regulated if factual/comparative, not a recommendation |
| Passing leads to authorised brokers | Introducer / referrer arrangement |
| Quote-and-bind / policy placement | Must be under AR or own permissions |
| Claims support / negotiation | Needs care; may stray into regulated claims management or legal services |

## Strategic Takeaway

SoVael can launch Phase 1 (lead gen + gap analysis) quickly as an intelligence layer. Phase 2 (quote engine) and Phase 3 (bind) require an AR or direct FCA authorisation. Phasing keeps commercial risk low while proving unit economics.

## Sources

- FCA Policy Statement PS23/18 (IDD repeal).
- FCA Policy Statement PS25/21 (simplification of insurance rules).
- FCA Consumer Duty focus areas and 2025/26 Business Plan.
- FCA Appointed Representatives data.
- BIBA compliance guidance.