New rules implementing an EU directive that could affect the way personal injury solicitors, conveyancers and others advise clients on insurance policies have been approved by the Legal Services Board and Financial Conduct Authority.
The oversight regulators rubber-stamped regulations advanced by the Solicitors Regulation Authority (SRA) to make changes consistent with the Insurance Distribution Directive (IDD), which replaces the Insurance Mediation Directive and deals with issues such as conflicts of interest and commissions.
Implementation into UK law was delayed and the new rules will now come into force on 1 October.
Changes were needed to rules governing the way firms carry on financial services. Firms affected will include those which sell, advise on, or conclude insurance contracts, such as after-the-event costs insurance in a personal injury matter, or insurance for a defective title in a conveyance.
Among other things, the IDD sets minimum hours for continuing professional development of staff involved in distributing insurance; a requirement for a complaints and redress process; an obligation to disclose any conflict information to clients; to act honestly, fairly and honestly; and so on.
The SRA advised: “All firms should therefore assess their own individual practices and make sure they are… able to comply with the revised rules.”
The regulator said it would be writing to “a number of firms” that indicated that they carry on insurance mediation activities in their responses to the 2017 financial services activities questionnaire.
Paul Philip, the SRA’s chief executive, said: “Our changes meet the requirements of the new directive without putting unnecessary burdens on firms. For example, in many areas our Code of Conduct already covers what is needed.
“It’s important that firms make sure they are up to date with the revised requirements, so that they can provide a proper service to their clients.”