"Taken together, these reforms are part of a broader direction of travel, moving away from rigid rulebooks towards more flexible, outcome‑focused regulation."
- Cormac Bradley - Broadstone
The FCA has launched its latest consultation paper, CP26/22: Simplifying the insurance rules, for insurers and intermediaries. This forms part of the FCA’s proposals to streamline insurance rules and make them less complex for firms.
Within the paper, the FCA reveals that it is consulting on simplifying rules for advised sales of insurance products, which would involve removing references to 'advice' that are not classed as a personal recommendation as defined in Article 53 of the Regulated Activities Order (RAO).
This is designed to further clarify the distinction between advised and non-advised sales, and as a result, the paper states that firms would "only be subject to the advice rules if they are providing a personal recommendation for the insurance arrangements they are selling."
This change would also mean that some sales would no longer be classed as advised, but the FCA describes these situations as "rare."
In terms of advised sales, the proposal would also mean that firms would no longer be required to disclose whether or not their advice is a personal recommendation or advice based on a personal, fair market analysis, as the FCA says it does not believe that this is necessary to help customers understand the proposed arrangements.
The consultation questions for this section are question 10: "Do you agree with our proposals to limit rules on advised sales to sales involving a personal recommendation? Please explain your answer," and question 11: "Do you agree with our proposal to remove the distinction between advised sales which do and do not involve a fair (and personal) analysis of the market? Please explain your answer."
The paper also includes proposals for removing unnecessary disclosure requirements, increasing flexibility in means of disclosure, amending rules for professional indemnity insurance (PII), and narrowing the scope of its rules for non-UK business.
The deadline for insurers and intermediaries to read and respond to the consultation paper is 4th September 2026.
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"The FCA proposals represent a shift towards a more principles‑based regulatory framework, reducing unnecessary complexity while maintaining appropriate consumer protections," Cormac Bradley, senior actuarial director at Broadstone, said. "The optional nature of many of the changes is particularly welcome, avoiding unnecessary implementation costs.
"Aligning the territorial scope of ICOBS and PROD 4 more closely with genuine UK customer connections should materially reduce duplication for international insurers and intermediaries. Stepping back from detailed, prescriptive requirements and relying more on high‑level frameworks such as the Consumer Duty and SYSC should make the UK a more attractive base for cross‑border insurance business.
"The proposals to streamline disclosure requirements are also significant. Removing elements such as ICOBS 4.2 and other low‑value disclosures recognises the reality that length boilerplate does little for customer understanding. A more flexible approach to communication, particularly through digital channels, better reflects how customers engage today, while reducing reliance on costly paper‑based processes.
"Importantly, the FCA has avoided introducing a 'local regulatory backstop', which would have risked reintroducing complexity and uncertainty. However, striking the right balance on disclosure simplification will be key, and industry feedback ahead of the 4 September deadline will be critical in ensuring consumer understanding is not diluted.
"Taken together, these reforms are part of a broader direction of travel, moving away from rigid rulebooks towards more flexible, outcome‑focused regulation. While the full benefits will emerge cumulatively across the FCA’s wider simplification agenda, this package goes to the heart of how firms engage with customers in a clearer, more modern and proportionate way."
