ICOBS (Insurance: Conduct of Business Sourcebook):
ICOBS (Insurance: Conduct of Business Sourcebook):
This presentation explains detailed information from the input exactly as provided.
ICOBS 1 & ICOBS 2
ICOBS 1: Application
Determine which ICOBS rules are applicable based on the type of insurance products and distribution methods used by the firm.
What it’s there for? :Establishes the scope of the rules for insurance businesses, ensuring firms know which regulations apply to their specific activities.
ICOBS 2: General Matters
Ensure all communications are clear, fair, and not misleading. Provide information in a way that is comprehensible to customers and appropriate to the complexity of the product.
What it’s there for?: Ensures all communications with customers are transparent, fair, and easy to understand, promoting honesty in customer interactions.
ICOBS 3 & ICOBS 4
ICOBS 3: Distance Marketing
Adhere to additional requirements for distance contracts, such as providing pre-contractual information tailored for telephone sales, including the main characteristics of the product and the total price.
What it’s there for?: Sets additional rules for distance selling, ensuring customers receive necessary information when buying insurance over the phone.
ICOBS 4: Information about the Firm, its Services and Remuneration
Clearly disclose the firm's identity, its address, the nature of its services, and any third-party remuneration or commission that may affect customers.
What it’s there for? Requires firms to disclose key information about themselves and their services, ensuring transparency in their operations and remuneration.
ICOBS 5, 6 & 7
ICOBS 5: Identifying Client Needs and Providing Product Information
Assess customer demands and needs and ensure products offered are consistent with those needs. Provide appropriate product information to help customers make informed decisions.
What it’s there for? Guides firms in understanding and addressing customer needs while providing sufficient product information, even in a non-advised sale.
ICOBS 6: Product Information
Offer comprehensive details about the insurance product, including key features, terms, conditions, risks, and exclusions, to allow customers to make informed choices.
What it’s there for? Ensures customers receive detailed product information, including terms and conditions, helping them make informed purchasing decisions.
ICOBS 7: Cancellation
Inform customers of their rights to cancel within the cooling-off period and facilitate the cancellation process efficiently as per regulatory requirements.
What it’s there for?: Defines customer rights regarding cancellation, ensuring they are informed about and can exercise their right to cancel within the cooling-off period.
SYSC (Senior Management Arrangements, Systems and Controls)
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SYSC 3: Systems and Controls
Implement robust systems and controls to manage business operations, including effective risk management and compliance frameworks.
What it’s there for?: Mandates appropriate internal controls and risk management systems to ensure effective business management and regulatory compliance.
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SYSC 4: General Organisational Requirements
Maintain an organisational structure with clear lines of responsibility and reporting, ensuring all staff are aware of their roles and responsibilities.
What it’s there for? Requires a clear organisational structure with defined responsibilities, promoting efficient management and accountability.
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SYSC 6: Compliance, Internal Audit and Financial Crime
Develop comprehensive compliance and internal audit functions to detect and prevent financial crime and ensure adherence to regulatory obligations.
What it’s there for?: Ensures firms have robust compliance and internal audit functions to prevent financial crime and maintain regulatory standards.
SYSC 28 & SYSC 28.1: Insurance Product Governance
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SYSC 28
Focuses on product governance, requiring firms to design and manage products effectively, ensuring they meet the needs of the target market and deliver fair outcomes.
What it’s there for? This section sets out requirements for firms regarding the design, approval, and distribution of insurance products. Key points include:
Product Approval Process: Establish and maintain procedures for the approval of each insurance product before it is marketed or distributed. This includes identifying the target market and ensuring the product meets the needs of that market.
Product Oversight and Governance Arrangements: Implement appropriate governance arrangements to oversee the product’s development, marketing, and distribution, ensuring it aligns with customers' interests.
Continuous Review: Regularly review products to ensure they continue to meet the needs of the target market and take action if any issues are identified.
Distribution Channels: Ensure that the distribution channels are appropriate for the target market and that the distributors have the necessary information and understanding of the product.
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SYSC 28.1
SYSC 28.1 specifically addresses the application of the insurance product governance requirements. It outlines the scope and applicability of the rules concerning insurance product governance. Key elements include:
Applicability: This section specifies which firms are subject to the product governance requirements, typically those involved in manufacturing and distributing insurance products.
Proportionality: The requirements should be applied in a manner that is proportionate to the nature, scale, and complexity of the firm’s business and the products it offers.
Responsibility: Firms are responsible for ensuring that their products meet the needs of the identified target market and deliver fair outcomes to customers.
SYSC 28.1 serves as an introduction to the broader requirements set out in SYSC 28, providing context on how these rules should be implemented by firms engaged in insurance distribution, including those operating non-advised call centres.
PRIN (Principles for Businesses) & TC (Training and Competence)
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PRIN (Principles for Businesses):
What it’s there for? Sets overarching principles for how firms should conduct business, including acting with integrity, skill, and fairness, while prioritising customer interests.
Principle 1: Integrity - Conduct business with honesty and integrity in all dealings.
Principle 2: Skill, Care, and Diligence - Perform duties with the necessary skill, care, and diligence to meet regulatory standards.
Principle 6: Customers' Interests - Prioritise the interests of customers and ensure fair treatment throughout the customer lifecycle.
Principle 7: Communications with Clients - Ensure all client communications are accurate, balanced, and do not mislead.
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TC (Training and Competence):
What it’s there for? Ensures that staff are adequately trained and competent to perform their roles, maintaining high standards of service and regulatory compliance.Ensures that staff are adequately trained and competent to perform their roles, maintaining high standards of service and regulatory compliance.
TC 2: Competence - Ensure staff are competent and have the necessary skills and knowledge to perform their roles effectively.
TC 3: Induction and Training - Provide comprehensive initial training and induction for new employees to equip them with the required knowledge and skills.
TC 4: Maintaining Competence - Offer ongoing training and development opportunities to maintain and enhance employee competence.
DISP (Dispute Resolution: Complaints):
DISP 1: Treating Complaints Fairly - Establish a fair and transparent process for handling customer complaints, ensuring timely and appropriate responses.
DISP 2: Internal Complaints Handling - Implement internal procedures for the efficient management and resolution of complaints, keeping thorough records and providing customers with clear communication.
SUP (Supervision)
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SUP 10A: FCA Approved Persons
Ensure key individuals in significant roles are approved by the FCA and meet the necessary standards of conduct.
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SUP 15: Notifications to the FCA
Notify the FCA of any significant changes or events, such as changes in control or breaches of regulatory requirements.
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SUP 16: Reporting Requirements
Submit required reports and data to the FCA accurately and on time, ensuring compliance with all reporting obligations.