The UK's Financial Conduct Authority is consulting interested parties about the European Union's Insurance Distribution Directive.

The Insurance Mediation Directive was introduced in early 2005 and was designed to encourage competition between insurance firms and protect customers from sharp practice. The IDD, with which the UK is required to comply by 23 February 2018, aims to strengthen and consolidate the existing rules of the IMD.

The IDD concerns the distribution of insurance and reinsurance and also covers after-sales help in the administration and performance of insurance contracts.

The consultative paper covers the FCA’s proposals for the application of the directive, which include the following areas:

• professional and organisational requirements;
• complaints handling and out-of-court redress;
• professional indemnity insurance (PII);
• changes to conduct-of-business rules (for non-investment insurance contracts); and
• the regulatory regime for ancillary insurance intermediaries.

The IDD will apply more broadly than the IMD and bring consumer protection rules in line with those in other financial markets. Another aim is to encourage competition between insurance intermediaries.

The FCA will publish a second consultative paper later this year. It will touch on those IDD requirements on which the EU has not yet decided. It will also develop the FCA’s approach to the 'conduct requirements' for life policies as regards the EU's second Markets in Financial Instruments Directive (MiFID II).