The International Underwriting Association (IUA), the Chartered Insurance Institute (CII), and the Lloyd's Market Association (LMA) have issued responses to the Financial Conduct Authority's (FCA) Policy Statement 25/21, which aims to simplify UK insurance regulations and reduce compliance costs for firms while maintaining protections for smaller commercial customers.
Under the final rules, insurers and intermediaries will have greater discretion over how often they review products and how much Continuing Professional Development (CPD) staff are required to complete. The FCA said these measures are intended to give firms more flexibility and responsibility within an outcomes-based framework.
The changes form part of a wider post-Brexit and post-Consumer Duty recalibration, with the regulator signalling plans to remove over 100 pages of legacy insurance guidance from the Handbook. The FCA also emphasised the need for a sharper distinction between large commercial customers and smaller firms or individual consumers, reflecting the view that sophisticated entities can manage risk with less intensive conduct oversight.
Nafisah Hussain, acting director of public policy at the IUA, welcomed the FCA's efforts to clarify the definition of a retail customer and the treatment of non-UK business. She highlighted that these issues are critical for proportionate regulation and the UK’s economic growth.
“While the direction of travel is encouraging, the pace of change must accelerate," Hussain said. She urged the regulator to resolve these matters by the end of 2026, providing certainty for insurers and brokers while strengthening the UK’s competitiveness as a global insurance centre.
The CII focused on the removal of the mandatory 15-hour CPD requirement, giving firms more flexibility to ensure staff competency. While the FCA emphasised that this change does not relax overall standards, the CII welcomed the move, noting that tools such as its Professional Map can help firms and individuals plan appropriate training.
Meanwhile, Cormac Bradley, senior actuarial director at Broadstone, described the FCA statement as a proportionate update rather than a wholesale rewrite. He noted three front-line impacts, including clearer boundaries between larger commercial customers and SMEs, more flexible CPD frameworks, and a streamlined approach to Employers' Liability register reporting.
Bradley suggested that brokers and insurers might now review client portfolios with greater discretion, adjusting product oversight and service models depending on customer sophistication, rather than following rigid compliance schedules.
CEO of the LMA Sheila Cameron welcomed incremental measures such as proportional fair value assessments and flexible training requirements but called the policy statement a missed opportunity for meaningful simplification in the commercial and specialty insurance sector.
Cameron highlighted unresolved issues, including the territorial scope of the rulebook and the definition of “consumer”, which are essential to reducing regulatory burdens in the London market while protecting genuine retail customers.
"We therefore join the LMG in urging the FCA to deliver these substantive reforms within the next 12 months," Cameron said. "Only by addressing these long-standing issues can the FCA achieve the level of regulatory clarity and efficiency that the London market requires."
In practice, insurers are expected to leverage these changes by streamlining internal compliance processes, reallocating resources to high-risk areas, and introducing risk-based client monitoring.
Brokers can also adjust how they document advice and reviews for SMEs versus larger commercial clients, potentially reducing administrative burdens while focusing on value-added services. Firms may use digital tools to track employee competency and professional development, ensuring training is tailored and efficient, rather than simply meeting hourly mandates.
Overall, industry responses indicate cautious approval of the FCA’s direction, with a clear call for accelerated action on outstanding issues to ensure practical benefits for insurers, brokers, and consumers alike. The statement is seen as a step toward a more proportionate, flexible regulatory framework that aligns oversight with customer needs and market realities.
