The Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018

PART 2 Amendments to the principal Order

Amendments to the principal Order

2.  This Part amends the principal Order.

Specified activities: general

3.  In article 4 (specified activities: general)—

(a) for paragraph (4A)(1) substitute—

“(4A) Where a person, other than an ancillary insurance intermediary carrying out insurance distribution activities falling within Article 1.3 of the insurance distribution directive (the text of which is set out in Part 1 of Schedule 4)—

(a) for remuneration, takes up or pursues insurance distribution, or reinsurance distribution, in relation to a risk or commitment located in an EEA State, and

(b) in doing so would be treated as carrying on an activity of a specified kind by a provision of this Part but for an exclusion in any of articles 30, 66, 67 and 72AA,

that exclusion is to be disregarded (and accordingly that person is to be treated as carrying on an activity of the kind specified by the provision in question).”, and

(b) for paragraph (5)(2) substitute—

“(5) In this article—

“ancillary insurance intermediary” has the meaning given by Article 2.1(4) of the insurance distribution directive, the text of which is set out in Part 4 of Schedule 4;

“insurance distribution” has the meaning given by Articles 2.1(1) and 2.2 of the insurance distribution directive, the text of which is set out in Parts 2 and 5 of Schedule 4, respectively; and

“reinsurance distribution” has the meaning given by Articles 2.1(2) and 2.2 of the insurance distribution directive, the text of which is set out in Parts 3 and 5 of Schedule 4, respectively.”.

Activities: arranging deals in investments – exclusions

4.  In article 33 (introducing), for paragraph (d)(3), substitute—

“(d) The arrangements—

(i) are made with a view to a person entering into a transaction which does not relate to a contract of insurance, or

(ii) are of the type specified in article 33B (provision of information – contracts of insurance).”.

5.  After article 33A (introducing to authorised persons etc.)(4) insert—

“Provision of information – contracts of insurance

33B.— (1) There is excluded from article 25(1) and (2) (arranging deals in investments) the making of arrangements for, or with a view to, a transaction for the sale or purchase of a contract of insurance, where that activity meets the conditions specified in paragraphs (2) and (3).

(2) The conditions specified in this paragraph are that the activity—

(a) consists of the provision of information about a potential policyholder to a relevant insurer or an insurance or reinsurance intermediary, or

(b) consists of the provision of information to a potential policyholder about—

(i) a contract of insurance, or

(ii) a relevant insurer or insurance or reinsurance intermediary.

(3) The condition specified in this paragraph is that the provider of the information does not take any step other than the provision of information to assist in the conclusion of a contract of insurance.

(4) In this article—

“insurance intermediary” has the meaning given in Article 2.1(3) of the insurance distribution directive;

“reinsurance intermediary” has the meaning given in Article 2.1(5) of the insurance distribution directive;

“relevant insurer” has the meaning given in article 39B(2) (claims management on behalf of an insurer etc.).”.

Activities carried on by a provider of relevant goods or services – exclusions

6.  In article 72B(1) (activities carried on by a provider of relevant goods or services)(5)—

(a) in the definition of “connected contract of insurance”—

(i) omit paragraph (b);

(ii) for paragraph (c), substitute—

“(c) has a premium of—

(i) 600 euro or less (calculated on a pro rata annual basis), or

(ii) where the insurance is complementary to a service being provided by the provider and the duration of that service is equal to or less than three months, 200 euro or less,

or equivalent amounts of sterling or another currency;”;

(iii) at the end of paragraph (d)(i), omit “or”;

(iv) after paragraph (d)(i), insert—

“(ia) the non-use of services supplied by the provider; or”;

(v) at the end of paragraph (e), add “and”;

(vi) omit paragraph (g) and the “and” immediately preceding it; and

(b) in the definition of “provider”, for “non-motor goods”, substitute “non-motor goods or services”.

Unauthorised persons carrying on insurance distribution activities

7.—(1) Part 5 (unauthorised persons carrying on insurance mediation activities)(6) is amended as follows.

(2) In the heading, for “MEDIATION”, substitute “DISTRIBUTION”.

(3) In article 92 (interpretation), in the definition of “insurance mediation activity”, for “mediation”, substitute “distribution”.

(4) In article 93 (duty to maintain a record of persons carrying on insurance mediation activities)—

(a) for “mediation”, in each place it occurs (including in the heading), substitute “distribution”; and

(b) after paragraph (3), insert—

“(3A) An application for inclusion in the record made by a person who falls within paragraph (2) or (3) must be determined by the FCA before the end of the period of 3 months beginning with the date on which it received the completed application.

(3B) A notification by a designated professional body in accordance with article 94 is to be treated as an application for inclusion in the record for the purposes of paragraph (3A).”.

(5) In article 94 (members of designated professional bodies) for “mediation”, in each place it occurs, substitute “distribution”.

(6) In article 95 (exclusion from record where not fit and proper to carry on insurance mediation activities)—

(a) in the heading, and in paragraph (1), for “mediation”, substitute “distribution”; and

(b) after paragraph (1) insert—

“(1A) In making a determination as to whether a person is a fit and proper person for the purposes of paragraph (1), the FCA must consider whether the relevant registration conditions under Article 3 of the insurance distribution directive are met.”.

(7) In article 96 (exclusion from the record where FCA has exercised its powers under Part 20 of the Act), in paragraphs (2) and (3), for “mediation”, substitute “distribution”.

Relevant text of the insurance distribution directive

8.  For Schedule 4(7), substitute—

Article 4

“SCHEDULE 4 Relevant Text of the Insurance Distribution Directive

PART 1 Article 1.3

“This Directive shall not apply to ancillary insurance intermediaries carrying out insurance distribution activities where all the following conditions are met—

(a) the insurance is complementary to the good or service supplied by a provider, where such insurance covers—

(i) the risk of breakdown, loss of, or damage to, the good or the non-use of the service supplied by that provider; or

(ii) damage to, or loss of, baggage and other risks linked to travel booked with that provider;

(b) the amount of the premium paid for the insurance product does not exceed EUR 600 calculated on a pro rata annual basis;

(c) by way of derogation from point (b), where the insurance is complementary to a service referred to in point (a) and the duration of that service is equal to, or less than, three months, the amount of the premium paid per person does not exceed EUR 200.”

PART 2 Article 2.1(1)

“For the purposes of this Directive “insurance distribution” means the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts of insurance, of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim, including the provision of information concerning one or more insurance contracts in accordance with criteria selected by customers through a website or other media and the compilation of an insurance product ranking list, including price and product comparison, or a discount on the price of an insurance contract, when the customer is able to directly or indirectly conclude an insurance contract using a website or other media.”

PART 3 Article 2.1(2)

“For the purposes of this Directive “reinsurance distribution” means the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts of reinsurance, of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim, including when carried out by a reinsurance undertaking without the intervention of a reinsurance intermediary.”

PART 4 Article 2.1(4)

““ancillary insurance intermediary” means any natural or legal person, other than a credit institution or an investment firm as defined in points (1) and (2) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, who, for remuneration, takes up or pursues the activity of insurance distribution on an ancillary basis, provided that all the following conditions are met—

(a) the principal professional activity of that natural or legal person is other than insurance distribution;

(b) the natural or legal person only distributes certain insurance products that are complementary to a good or service;

(c) the insurance products concerned do not cover life assurance or liability risks, unless that cover complements the good or service which the intermediary provides as its principal professional activity.”

PART 5 Article 2.2

“For the purposes of points (1) and (2) of paragraph 1, the following shall not be considered to constitute insurance distribution or reinsurance distribution—

(a) the provision of information on an incidental basis in the context of another professional activity where—

(i) the provider does not take any additional steps to assist in concluding or performing an insurance contract;

(ii) the purpose of that activity is not to assist the customer in concluding or performing a reinsurance contract;

(b) the management of claims of an insurance undertaking or of a reinsurance undertaking on a professional basis, and loss adjusting and expert appraisal of claims;

(c) the mere provision of data and information on potential policyholders to insurance intermediaries, reinsurance intermediaries, insurance undertakings or reinsurance undertakings where the provider does not take any additional steps to assist in the conclusion of an insurance or reinsurance contract;

(d) the mere provision of information about insurance or reinsurance products, an insurance intermediary, a reinsurance intermediary, an insurance undertaking or a reinsurance undertaking to potential policyholders where the provider does not take any additional steps to assist in the conclusion of an insurance or reinsurance contract.””.

(1)

Paragraph (4A) was inserted by S.I. 2003/1476 and amended by S.I. 2014/1292.

(2)

Paragraph (5) was amended by S.I. 2003/1476 and S.I. 2006/3384.

(3)

Paragraph (d) was inserted by S.I. 2003/1476.

(4)

Article 33A was inserted by S.I. 2003/1475.

(5)

Article 72B was inserted by S.I. 2003/1476. Paragraph (1) was amended by S.I. 2007/3510, S.I. 2011/1265 and S.I. 2013/1881.

(6)

Part 5 was inserted by S.I. 2003/1476 and amended by S.I. 2013/472.

(7)

Schedule 4 was inserted by S.I. 2003/1476.