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In December 2001 HM Treasury announced its intention to regulate general insurance mediation activities through the Financial Services Authority. The regime is underpinned by the Financial Services Markets Act 2000.

A major factor influencing HM Treasury’s decision was the need for the UK to comply with European Legislation particularly the Insurance Mediation Directive (IMD). The IMD was introduced to tackle the inability of insurance intermediaries to operate freely throughout the European Community. It aims to create a single market in insurance across Europe.

The IMD was approved by the European Parliament on 30 September 2002 and published in the EU official journal on 15 January 2003. Member states were given 2 years to implement the directive. The regime came into force from 14 January 2005.

The Financial Services Act 2012 came into force on 1st April 2013 creating a new regulatory framework for Financial Services consisting of three regulatory bodies:

  • the Prudential Regulation Authority (the PRA);
  • the Financial Policy Committee (the FPC); and
  • the Financial Conduct Authority (FCA).

The PRA and FPC sit within the structure of the Bank of England. The PRA is responsible for the prudential supervision of:

  • banks;
  • building societies;
  • insurers;
  • friendly societies;
  • credit unions;
  • Lloyd’s of London and its managing agents; and
  • investment banks.

The FCA is responsible for:

  • regulating conduct in retail and wholesale markets;
  • supervising the trading infrastructure that supports those markets; and
  • the prudential regulation of firms not regulated by PRA (including insurance intermediaries).

Effective from the 1st of October 2018, the Insurance Distribution Directive (IDD) replaced the IMD and resulted in some major changes to previous FCA rules applicable to Insurance Intermediaries.

Effective from 9th December 2019 the Senior Managers & Certification Regime applies to Insurance Intermediaries resulting in further major changes and/or additions to previous rules.