The LMA has today issued guidance on the new FCA Pricing Practices rules and associated Product Reviews.
The new rules require carriers to provide information on most products, including features, target market and those whom the product is not likely to be suitable for. There is also a reciprocal requirement for intermediaries to report details of remuneration (including fees and commission) throughout the distribution chain.
The updated guidance includes a template, with notes and examples to facilitate the exchange of required information and is the result of a cross-market collaboration led by the LMA.
Steve Morrell, Head of Regulatory Affairs at the LMA, said: “The new rules, although seemingly relatively simple, had the potential to snowball into an unmanageable administrative burden for both carriers and intermediaries. It made sense therefore to adopt a co-ordinated approach and the LMA has worked closely with the ABI, BIBA, IUA, LIIBA and MGAA to agree a standard template, which should minimise the burden on our members.”
Development of the approach also included representatives from managing agents Ark, Beazley and Brit, and brokers Aon, Marsh and Willis Towers Watson.
Joanne Hart, Head of Conduct Risk and Complaints at Brit said: “The new rules had the potential to create significant work. However, we welcome the benefits they should bring. Intermediaries should be able to ensure a proper understanding of the value of the products they distribute and, in turn, carriers should gain a better understanding of the value of the distribution chain. Most importantly, it should go a long way to ensuring that end customers are receiving valuable products at fair prices.”
The LMA’s Pricing Practices and Product Reviews Guidance is published on its website. The Lloyd’s and London Market Product Information Exchange Template and associated guidance has also been published on the Lloyd’s Wordings Repository with LMA 9197 and LMA 9198 reference numbers.