The FCA’s publication of PS25/21, Simplifying the Insurance Rules, represents at the end of last year is a meaningful milestone in its efforts to modernise the UK insurance regulatory framework. For MGAs in particular, the policy statement goes beyond technical rule changes. It signals a more pragmatic regulatory mindset, one that recognises the diversity of distribution models in the market and the need to remove friction where it does not add value for customers.
The MGAA has consistently supported the FCA’s objective of simplifying regulation while preserving strong consumer protection. That balance is critical. The UK remains a global centre for commercial insurance, yet regulatory complexity has too often acted as a brake on innovation, product development and speed to market. MGAs, who differentiate themselves through specialism, efficiency and customer insight, have felt that burden acutely.
While the final rules broadly align with the original consultation, there are important nuances MGAs should understand, particularly around co-manufacturing, customer classification and product governance.
One of the most closely watched aspects of the simplification exercise was the FCA’s approach to co-manufacturing. On behalf of members, the MGAA made the case that, in many delegated authority arrangements, insurers deploy capital into markets and products where they may not hold the deepest underwriting expertise. MGAs, by contrast, often bring granular customer insight, proprietary data, product design capability and a clear view of claims delivery, all hallmarks of effective product manufacturing.
From that perspective, allowing MGAs to act as sole manufacturer would have been a logical step, removing duplication and aligning accountability with capability. The FCA has not yet gone that far, citing concerns drawn from previous supervisory work. However, it is notable that the door has not been closed. The regulator has explicitly stated it will keep this position under review.
The accompanying FCA statement on firms working together to manufacture products is an unusual but welcome addition. It provides greater clarity on how co-manufacturers can apply PROD obligations proportionately, provided responsibilities are clearly defined and documented. For MGAs operating in co-manufacturing arrangements, this is an area where careful governance, and, in some cases, independent assurance, will be essential.
The MGAA will continue to seek greater transparency from the FCA on the evidence underpinning its concerns, and clarity on what the sector must demonstrate to support a future move towards sole MGA manufacturing.
Another positive development is the replacement of the outdated “contracts of large risks” definition with clearer, more practical categories. The distinction between specialist risks contracts and larger commercial customers brings alignment with DISP thresholds and removes longstanding ambiguity.
For MGAs, this simplifies compliance and supports more proportionate product governance. That said, firms must still assess whether products may reach eligible consumers under DISP 2.7 and ensure customer outcomes remain central to product design. The absence of a revised retail definition, for now, means this remains an area to watch, particularly with a wider Consumer Duty review expected in 2026.
The expansion of the bespoke contract exemption under PROD 4 is another area where the FCA has responded to market feedback. By extending the exemption to insurers and intermediaries regardless of manufacturing status, the FCA has acknowledged the reality of niche and client-specific underwriting.
For MGAs operating in specialist segments, this offers an opportunity to remove unnecessary governance processes where contracts are genuinely bespoke. Firms should review their portfolios carefully against the revised guidance and consider whether existing controls remain proportionate.
Meanwhile, the removal of the mandatory 12-month product review cycle marks a significant cultural shift. Firms are now expected to set review intervals based on the risk of customer harm, supported by evidence and documentation.
This flexibility supports innovation, but it also places greater responsibility on manufacturers to justify their approach. Where MGAs are co-manufacturers, they must take ownership of review frequency decisions and ensure these are communicated clearly within the distribution chain.
At the same time, the FCA’s move away from prescriptive CPD hours in favour of competence-based expectations reflects a broader theme of the simplification drive. MGAs retain full responsibility for ensuring staff are competent for their roles, but now have greater freedom to tailor training frameworks to their business model, provided they can evidence effectiveness.
Similarly, changes to Employers’ Liability reporting streamline processes without diluting accountability. Deadlines remain firm, and the focus on accurate register data continues to be central to preventing customer harm.
Overall, PS25/21 is a constructive step. It reflects a regulator willing to engage with the market and adjust its approach where rules no longer serve their original purpose. For MGAs, the message is clear: simplification brings opportunity, but only where firms respond with robust governance, clear accountability and an unwavering focus on customer outcomes.
The conversation on co-manufacturing is not over. Nor is the wider simplification agenda. MGAs should expect further consultations through 2026 and beyond, and, with continued engagement, can be cautiously optimistic that future reforms will further recognise the unique value MGAs bring to the UK insurance ecosystem.
