Regulation Matters Brochure January 2019

5 | Regulation Matters - January 2019

FCA Handbook Notice 60 As a result of changes made in this Handbook Notice, you will need to review the provisions within your professional indemnity insurance (PII) to ensure the requirements are met from renewals due after 1st June 2019. Other changes remind firms of the change of approach regarding regular premium PPI complaints. The Handbook Notice changes the following parts of the FCA Handbook: n Appendix 3 of the Dispute sourcebook (DISP App 3) to resolve uncertainty about whether firms should consider the non-disclosure of commission at the point of sale and subsequent “recurring non-disclosure” (RND) when assessing regular premium payment protection insurance (PPI) complaints. It came into force on 8th November 2018. n Chapter 13 of the FCA’s Interim Prudential sourcebook for investment businesses (IPRU (INV) 13) and the table in IRU (INV) 13, TP 1. The changes require personal investment firms (PIFs) to have professional indemnity insurance (PII) policies that do not limit cover where the policyholder or a third party is insolvent, or where a person other than the PIF (such as, the Financial Services Compensation Scheme (FSCS)) makes a claim on the policy. The instrument comes into force on 1st June 2019, for PII policies affected or renewed from that date.

The FCA consulted on the proposals in its third consultation paper on its review of the funding of the FSCS (CP18/11). Feedback is set out in chapter 3 of Handbook Notice 60. The FCA notes concerns expressed about the consequences of increased costs for firms and reduced availability of PII, but believes that as most existing PII policies do not contain relevant exclusions, premiums are unlikely to increase significantly. The FCA will work with the FSCS to monitor compliance and the effectiveness of the intervention. WHAT SHOULD FIRMS DO NOW? You need to engage with your PII provider to verify that your policy is not exposed to the insolvency limitations described. This may mean you need to consider re-broking your PII cover.

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