ICOB Insurance: Conduct of Business

Part

ICOB Insurance: Conduct of Business

Printed on: 19/04/2025

Rulebook at: 01/11/2007

Chapters

ICOB 1 Application
and purpose
ICOB 2 General
rules (including unfair inducements)
ICOB 3 Financial
promotion
ICOB 4 Advising
and selling standards
ICOB 5 Product
disclosure
ICOB 6 Cancellation
ICOB 7 Claims
handling
ICOB 8 Distance non-investment mediation contracts with retail customers
Transitional Provisions and Schedules

ICOB 1

Application
and purpose

ICOB 1.1

Application and purpose

14/01/2005

Application

ICOB 1.1.1

ICOB applies in accordance with the rules in the remainder of this chapter.

01/11/2007

Purpose

ICOB 1.1.2

(1) The purpose of this chapter is to set out to whom, for what activities, and within what territorial limits the rules, evidential provisions and guidance in ICOB apply. The purpose of other chapters in ICOB is set out at the beginning of each chapter.
(2) ICOB implements, in part, provisions contained in a number of EC directives, including:

(a) the Insurance Mediation Directive, in respect of non-investment insurance contracts;
(b) the Distance Marketing Directive, in respect of non-investment insurance contracts and distance non-investment mediation contracts;
(c) the Consolidated Life Directive, in respect of cancellation rights and information requirements relating to non-investment insurance contracts which are pure protection contracts;
(d) the Third Non-Life Directive, in respect of information requirements relating to general insurance contracts; and
(e) the Fourth and the Fifth Motor Insurance Directives, in respect of claims made by injured parties arising from motor accidents in the EEA.

(3) This chapter also provides guidance on the application of other parts of the Handbook to an insurance intermediary that carries on insurance mediation activities to which ICOB applies.

01/11/2007

ICOB 1.2

General application: who? what?

14/01/2005

ICOB 1.2.1

(1) Except as provided for in ICOB 1.2.8 R to ICOB 1.2.15 R, ICOB applies to:

(a) an insurance intermediary, including an insurer, when it carries on insurance mediation activities for a customer in relation to a non-investment insurance contract or enters into a distance non-investment mediation contract with a retail customer;
(b) an insurer when acting as product provider in relation to a non-investment insurance contract;
(c) a firm when it manages the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's, in relation to a non-investment insurance contract;
(d) a firm which communicates or approves a non-investment financial promotion;
(e) a motor vehicle liability insurer; and
(f) the Society in relation to motor vehicle liability insurance business.

(2) Where a firm (or its appointed representative) ("A") has outsourced insurance mediation activities to a third party processor, any rule in ICOB which requires the third party processor, when acting as such, to disclose its identity to a customer must be read as applying to the third party processor only to the extent that it applies to A and as requiring disclosure of the identity of A.

06/03/2006

ICOB 1.2.2

(1) The definition of insurance intermediary includes an insurer when the insurer is carrying on insurance mediation activities, for example when, through its sales force, it advises on or arranges its own non-investment insurance contracts or those of another insurer.
(2) In relation to (1), insurers should note that INSPRU 1.5.13 R prevents an insurer from carrying on an insurance mediation activity in respect of a third party's products, unless the insurer can show that there is a natural fit or necessary connection between the insurer's insurance business and the third party's products.
(3) Firms which outsource regulated activities are reminded of the guidance on outsourcing in SYSC 3.2.4 G and the rules in SYSC 8.

01/01/2007

ICOB 1.2.3

(1) In the case of a non-investment insurance contract that is underwritten at Lloyd's by its members, the firm responsible for the management of the insurance business of the member (that is, the managing agent) discharges the obligations of the product provider, which would otherwise be discharged by an insurer. References to managing agents in ICOB therefore relate to their functions in managing the obligations of the member as product provider.
(2) Where there is a chain of insurance intermediaries between the insurer and the customer, ICOB applies only to the insurance intermediary in contact with the customer.

14/01/2005

Summary of the application of the chapters of ICOB

ICOB 1.2.4

A table summarising the application of the various chapters of ICOB to firms is set out in ICOB 1 Annex 1 G. For the detailed application of each chapter, see the application rule at the start of that chapter.

14/01/2005

ICOB 1.2.5

All chapters of ICOB are relevant to a firm that deals with a retail customer. Certain chapters of ICOB apply in part only or not at all if a firm is dealing with a commercial customer. Guidance on the term retail customer is set out in ICOB 1.7.3 G(1).

14/01/2005

Customers and policyholders

ICOB 1.2.5A

(1) In ICOB 2 (General rules) and ICOB 7 (Claims handling) (and in ICOB 1 (Application and purpose) in respect of those chapters), a customer is a policyholder or a prospective policyholder. Otherwise, only a policyholder or prospective policyholder who makes the arrangements preparatory to him concluding the contract of insurance (directly or through an agent) is a customer.
(2) A policyholder includes anyone who, upon the occurrence of the contingency insured against, is entitled to make a claim directly to the insurance undertaking.

06/03/2006

Customer to be treated as retail customer when status uncertain

ICOB 1.2.6

If it is not clear in a particular case whether a customer is a retail customer or a commercial customer, an insurance intermediary or an insurer, in relation to a non-investment insurance contract or a distance non-investment mediation contract, must comply with ICOB as if the customer were a retail customer.

14/01/2005

Customer to be treated as retail customer when contract covers him in both a private and business capacity

ICOB 1.2.6A

If an insurance intermediary or an insurer is dealing with a customer who is an individual in relation to a non-investment insurance contract or a distance non-investment mediation contract which would cover him in both a private and business capacity, the insurance intermediary or an insurer must comply with ICOB as if the customer were a retail customer.

14/01/2005

Application to insurers where the intermediary is unauthorised or where the sale involves a connected contract

ICOB 1.2.7

(1) An insurer must comply with the following ICOB requirements, which are applicable to insurers as product providers, if its non-investment insurance contracts are sold through an intermediary to whom ICOB does not apply (because the intermediary is not a firm) or if its non-investment insurance contracts are connected contracts:

(a) ICOB 2 (General rules (including unfair inducements));
(b) ICOB 3 (Financial promotion) if the insurer communicates or approves a financial promotion;
(c) ICOB 4.7 (Unsolicited services);
(d) ICOB 5 (Product disclosure) as explained in ICOB 5.2;
(e) ICOB 6 (Cancellation) except for general insurance contracts and connected contracts that are not distance contracts ICOB 6.1.5 R (5) and (6); and
(f) ICOB 7 (Claims handling).

(2) The circumstances in (1) may occur where article 72B of the Regulated Activities Order excludes certain regulated activities from regulation when carried on by providers of non-motor goods and services related to travel in relation to connected contracts. Guidance on the conditions that need to be satisfied by connected contracts is contained in PERG 5.11.13G to PERG 5.11.15G.

01/07/2005

Large risks within the EEA

ICOB 1.2.8

Where an insurance intermediary carries on insurance mediation activities for commercial customers in relation to contracts of large risks where the risk is located within the European Economic Area, the only provisions of ICOB that apply are:

(1) ICOB 5.4.5 R (Provision of a policy document to commercial customers); and
(2) ICOB 5.4.8 R and ICOB 5.4.9 G (Group policies sold to commercial customers)

14/01/2005

ICOB 1.2.9

Other parts of the Handbook apply where relevant to an insurance intermediary within ICOB 1.2.8 R, including Principle 7 (Communications with customers) instead of ICOB 2.2.3 R, which restates Principle 7 in slightly amended form.

14/01/2005

ICOB 1.2.9A

A provision in ICOB that applies to an insurer when acting as product provider or as a motor vehicle liability insurer applies where relevant in relation to contracts of large risks where the risk is located within the European Economic Area.

14/01/2005

Authorised professional firms

ICOB 1.2.10

ICOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for:

(1) ICOB 2.2.3 R to ICOB 2.2.7 G (Clear, fair and not misleading communication);
(2) ICOB 3 (Financial promotion);
(3) ICOB 4.2.2 R in relation to the information for customers in table ICOB 4.2.8 R items numbered (8), (9) and note 4 covering complaints and compensation; and
(4) those sections in ICOB which implement articles 12 and 13 of the Insurance Mediation Directive, unless:

(a) the designated professional body of the firm has made rules which implement some or all of the provisions of articles 12 and 13 of the Insurance Mediation Directive;
(b) those rules have been approved by the FSA under section 332(5) of the Act; and
(c) the firm is subject to the rules in the form in which they were approved.

in which case those sections of ICOB which implement articles 12 and 13 of the Insurance Mediation Directive are disapplied to the extent that these articles are implemented by the rules of the designated professional body.

01/11/2007

ICOB 1.2.11

(1) Compliance by an authorised professional firm with provisions of the Distance Marketing Regulations is dealt with in PROF 5.4.
(2) The effect of ICOB 1.2.10 R(4) is that if the relevant designated professional body of an authorised professional firm does not make rules implementing articles 12 and 13 of the Insurance Mediation Directive applicable to authorised professional firms those authorised professional firms will need to comply with those sections of ICOB which implement articles 12 and 13 of the Insurance Mediation Directive , namely ICOB 4.1 to ICOB 4.4 and ICOB 4.8.

01/11/2007

Service companies

ICOB 1.2.12

ICOB does not apply to a service company, except for:

(1) [deleted]
(2) ICOB 3 (Financial promotion); and
(3) any provision of ICOB incorporated into (1) or (2) by reference.

01/11/2007

What contracts? Reinsurance contracts

ICOB 1.2.13

ICOB does not apply if the activities within ICOB 1.2.1 R relate to a reinsurance contract.

14/01/2005

Contracts of large risks outside the EEA

ICOB 1.2.14

ICOB does not apply to the mediation of contracts of large risks where the risk is located outside the European Economic Area.

14/01/2005

Group policies

ICOB 1.2.15

(1) If a non-investment insurance contract is a group policy, ICOB (except for ICOB 2 (General rules) and ICOB 7 (Claims handling)) does not apply with respect to a person under such a policy who is not the legal holder of the policy, subject to (2).
(2) If a firm makes a personal recommendation that a person becomes a policyholder member of a group policy, ICOB 4.3 and ICOB 4.4 apply to that personal recommendation as if the contract were being concluded.

06/03/2006

ICOB 1.2.16

(1) All chapters of ICOB are relevant to a firm that deals with a retail customer unless ICOB 1.2.15 R applies. Certain chapters of ICOB apply in part only or not at all if a firm is dealing with a commercial customer.
(2) A policyholder includes a member of a group policy who did not conclude the group policy with the insurance undertaking but who is entitled under the terms of that policy to make a claim on the insurance undertaking. This would include a dependant of a policyholder member of a group policy if that dependant has a direct right to claim. Where a customer concludes a group policy, only limited provisions in ICOB will apply to other policyholders as specified in ICOB 1.2.15 R and by the definition of customer.
(3) A person whose right or interest in a contract of insurance that is a group policy does not entitle him to make a claim directly to an insurance undertaking (for example, because he is required to make his claim to an employer or trustees) is not a customer or a policyholder.
(4) ICOB 5.3.29 R and ICOB 5.4.8 R provide for customers who conclude group policies to be given a policy summary, unless the customer is a commercial customer and there is no policyholder who is capable of being a retail customer, and to be informed that they should give that policy summary to each policyholder who is capable of being a retail customer.
(5) ICOB 1.2.15 R applies regardless of how a person becomes a policyholder under a group policy, for example automatically as part of a contract of employment, or voluntarily as part of a flexible benefits package.

06/03/2006

Pure protection contracts: election to apply COBS rules

ICOB 1.2.17

(1) This sourcebook does not apply to the extent that:

(a) the activities to which this sourcebook applies relate to a pure protection contract; and
(b) the firm has elected to comply with the Conduct of Business sourcebook;

but the firm must then comply with the rest of the Handbook treating the pure protection contract as a life policy and a designated investment, and not as a non-investment insurance contract.
(2) A firm must make a record in a durable medium of the election (and any reversal of or amendment to the election) which includes:

(a) the date from which the election takes effect; and
(b) a precise description of the part of the firm's business to which the election applies;

and must retain that record indefinitely.

06/06/2007

ICOB 1.3

General application: where?

14/01/2005

UK establishments: Territorial scope of ICOB 2 to ICOB 8

ICOB 1.3.1

Except as set out in this section, ICOB 2 to ICOB 8 apply in relation to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom only.

14/01/2005

ICOB 1.3.2

In addition to the situation in ICOB 1.3.1 R, ICOB 4.2.19 R (Overseas business for UK retail customers) applies wherever the activity is conducted.

14/01/2005

UK establishments: Exemption for insurers and managing agents

ICOB 1.3.2A

(1) Notwithstanding ICOB 1.3.1 R, this rule sets out circumstances in which some or all of the rules in ICOB are disapplied for an insurer or a managing agent in relation to any non-investment insurance contract provided, or which may be provided, by it (or in the case of a managing agent, by members for whom it acts).
(2) ICOB does not apply if:

(a) the intermediary (whether or not an insurance intermediary) in contact with the customer is not established in the United Kingdom; and
(b) the customer is not habitually resident in, and, if applicable, the State of the risk is outside, an EEA State.

(3) A rule in ICOB which goes beyond the minimum required by Community legislation does not apply if the customer is habitually resident in (and, if applicable, the State of the risk is) an EEA State other than the United Kingdom, to the extent that the EEA State in question imposes measures of like effect.

14/01/2005

Financial promotions: Territorial scope of ICOB 3

ICOB 1.3.3

Notwithstanding ICOB 1.3.1 R, the territorial scope of ICOB 3 (Financial promotion) is set out in ICOB 3.4 (Application: where?).

14/01/2005

General insurance contracts: Territorial scope of ICOB 5

ICOB 1.3.4

In addition to the situation in ICOB 1.3.1 R, but subject to ICOB 1.3.6 R, ICOB 5.5.20 R(1) to (3) (Directive-required information) and the other rules in ICOB 5 (in so far as they relate to such information) apply to firms in relation to business in respect of general insurance contracts if the State of the risk is the United Kingdom.

14/01/2005

Pure protection contracts: Territorial scope of ICOB 5 and ICOB 6

ICOB 1.3.5

In addition to the situation in ICOB 1.3.1 R, but subject to ICOB 1.3.6 R, ICOB 5.5.20 R(4) to (15) and (22) (Directive-required information), the other rules in ICOB 5 (in so far as they relate to such information), and ICOB 6 apply to firms in relation to business in respect of non-investment insurance contracts which are pure protection contracts if the habitual residence of the customer is in the United Kingdom.

14/01/2005

Exception to extended territorial scope of ICOB 5 and ICOB 6 for distance contracts provided from other EEA States

ICOB 1.3.6

The rules in ICOB 1.3.4 R and ICOB 1.3.5 R do not apply with respect to an activity exclusively concerning a distance contract with a retail customer, if the following conditions are satisfied:

(1) the firm carries on the activity from an establishment maintained by the firm in an EEA State other than the United Kingdom;
(2) either that EEA State:

(a) has implemented the Distance Marketing Directive ; or
(b) has obligations in its domestic law corresponding to those provided for by the Distance Marketing Directive;

(3) and, in either case, with the result that the obligations provided for by the Distance Marketing Directive (or corresponding obligations) are applied by that EEA State when the firm carries on that activity; and
(4) the firm is a national of an EEA State or a company or firm mentioned in article 48 of the Treaty.

01/11/2007

ICOB 1.3.7

The restriction in ICOB 1.3.6 R reflects the fact that the provisions of the Distance Marketing Directive will be for the country of origin of the insurance intermediary to enforce. This is the state of the firm's establishment (head office or branch) carrying on the insurance mediation activity.

14/01/2005

Incoming e-commerce activities

ICOB 1.3.8

This sourcebook does not apply to an incoming ECA provider acting as such, except that the rules on financial promotion continue to apply for incoming electronic commerce activities carried on by an insurer unless its country of origin applies rules of like effect.

01/11/2007

ICOB 1.3.9

ICOB 1.4 contains guidance on how this sourcebook is modified by ECO.

14/01/2005

Insurance Mediation Directive passported activities

ICOB 1.3.10

(1) In addition to ICOB 1.3.1 R, the provisions in ICOB 1.3.11 R apply to the passported activities carried on by a UK firm under the Insurance Mediation Directive from a branch elsewhere in the EEA unless the Host State regulator imposes measures which implement articles 12 and 13 of the Insurance Mediation Directive for those activities.
(2) Notwithstanding ICOB 1.3.1 R, the provisions in ICOB which implement articles 12 and 13 of the Insurance Mediation Directive do not apply to a UK firm providing cross border services in another EEA State under the Insurance Mediation Directive, except that:

(a) the provisions in ICOB 1.3.11 R apply if the Host State regulator does not impose minimum measures which implement articles 12 and 13 of the Insurance Mediation Directive for those activities; and
(b) the other provisions in ICOB relating to articles 12 and 13 of the Insurance Mediation Directive apply unless the Host State regulator imposes measures of like effect for those activities.

(3) Notwithstanding the other rules in this section, the only provisions in ICOB that apply to an incoming EEA firm carrying on passported activities under the Insurance Mediation Directive in the United Kingdom are:

(a) ICOB 3 (Financial promotion);
(b) the provisions in ICOB 1.3.11 R if the firm's Home State regulator does not impose minimum measures which implement articles 12 and 13 of the Insurance Mediation Directive for those activities;
(c) the other provisions in ICOB relating to articles 12 and 13 of the Insurance Mediation Directive (beyond the minimum required to implement these articles) unless the firm's Home State regulator imposes measures of like effect for those activities; and
(d) (if the activities are carried on from a branch in the UK and are in connection with a distance contract with a retail customer) the provisions in ICOB which implement the Distance Marketing Directive in respect of a distance non-investment mediation contract, unless the firm's Home State imposes measures which implement, or correspond to obligations provided for by, the Distance Marketing Directive.

01/11/2007

ICOB 1.3.11

The provisions referred to in ICOB 1.3.10 R are:

(1) ICOB 4.2.2 R to ICOB 4.2.8 R, ICOB 4.2.11 R, ICOB 4.2.14 R and ICOB 4.2.20 R;
(2) ICOB 4.3;
(3) ICOB 4.4 (except ICOB 4.4.7 R); and
(4) ICOB 4.8.1 R.

14/01/2005

ICOB 1.3.12

(1) The provisions in ICOB 1.3.11 R are the minimum provisions required for the implementation of articles 12 and 13 of the Insurance Mediation Directive.
(2) The effect of ICOB 1.3.10 R is to apply these minimum provisions to firms in respect of their insurance mediation activities passported under the Insurance Mediation Directive if other EEA States have not implemented articles 12 and 13 of the Insurance Mediation Directive for those activities.
(3) Firms are reminded that insurers have passporting rights under the Insurance Directives but not under the Insurance Mediation Directive, and so ICOB 1.3.10 R does not apply to insurers.

01/11/2007

Motor vehicles normally based in the UK

ICOB 1.3.13

Notwithstanding anything in this section, the motor vehicle liability claims handling rules apply to a motor vehicle liability insurer in respect of a vehicle normally based in the United Kingdom.

11/06/2007

ICOB 1.5

Summary of Handbook provisions for insurance intermediaries

14/01/2005

ICOB 1.5.1

A table summarising the application of the Handbook to firms carrying on insurance mediation activities is set out in ICOB 1 Annex 2 G. For the detailed application of each module, see the application provision at the start of the module, or its chapter or section.

14/01/2005

ICOB 1.6

Application to appointed representatives

14/01/2005

ICOB 1.6.1

(1) Although ICOB does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of ICOB, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act).
(2) ICOB 8.5 (Cancellation requirements) does not apply to a distance non-investment mediation contract entered into by an appointed representative itself to provide insurance mediation activity services to a retail customer. Regulation 9 (Right to cancel) to 13 (Payment for services provided before cancellation) of the Distance Marketing Regulations apply instead. See also ICOB 1.7.3 G (4) (guidance on distance non-investment mediation contracts).
(3) Firms should refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives.

14/01/2005

ICOB 1.7

Guidance on application of the Distance Marketing Regulations and expressions derived from the Distance Marketing Directive

14/01/2005

ICOB 1.7.1

The purpose of ICOB 1.7.2 G and ICOB 1.7.3 G is to provide:

(1) guidance on the application of parts of the Distance Marketing Regulations for non-investment insurance contracts and distance non-investment mediation contracts; and
(2) guidance on expressions in ICOB derived from the Distance Marketing Directive.

14/01/2005

Application of parts of the Distance Marketing Regulations

ICOB 1.7.2

ICOB implements most of the Distance Marketing Directive for non-investment insurance contracts that are distance contracts and for distance non-investment mediation contracts. However, certain aspects of the Distance Marketing Directive are implemented by provisions of the Distance Marketing Regulations, which apply in addition to ICOB, in particular:

(1) Regulation 12 (Automatic cancellation of an attached distance contract); and
(2) Regulation 14 (Payment cards).

14/01/2005

Guidance on expressions derived from the Distance Marketing Directive

ICOB 1.7.3

ICOB adopts certain expressions derived from the Distance Marketing Directive, as follows:

(1) Retail customer

(a) The Distance Marketing Directive applies to 'any natural person who is acting for purposes which are outside his trade, business or profession'. In ICOB the term 'retail customer' has been adopted. In practice, private individuals may act in a number of capacities. In the FSA's view, a customer will be a commercial customer and not a retail customer if he is an individual acting, for example:

(i) as trustee of a trust such as a housing or NHS trust;
(ii) as member of the governing body of a club or other unincorporated association such as a trade body and a student union;
(iii) as pension trustee;
(iv) as a person taking out, or who has taken out, a non-investment insurance contract relating to property bought under a buy-to-let mortgage;
(v) as partner in a partnership when taking out insurance for purposes wholly related to his profession.

(b) Examples of individuals who would be regarded as retail customers include:

(i) personal representatives, including executors, unless they are acting in a professional capacity, for example, a solicitor acting as executor; and
(ii) private individuals acting in personal or other family circumstances, for example, as trustee of a family trust.

(2) Distance contract

(a) To be a distance contract, a contract must be concluded under an 'organised distance sales or service-provision scheme' run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or through an insurance intermediary) of one or more means of distance communication up to and including the time at which the contract is concluded. So:

(i) the insurance intermediary must have put in place facilities designed to enable a retail customer to deal with it exclusively at a distance, such as facilities for a retail customer to deal with it purely by post, telephone, fax or the Internet. If an insurance intermediary normally operates face-to-face and has no facilities in place enabling a retail customer to deal with it customarily by distance means, the Distance Marketing Directive will not apply. A one-off transaction effected exclusively by distance means to meet a particular contingency or emergency will not be a distance contract; and
(ii) there must have been no simultaneous physical presence of the insurance intermediary and the retail customer throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the Internet, through a telemarketing operation or by post, will normally be distance contracts. A retail customer may visit the local office of the insurance intermediary in the course of the offer, negotiation or conclusion of a contract with that insurance intermediary. Wherever, in the literal sense, there has been "simultaneous physical presence" of the insurance intermediary and the retail customer at the time of such a visit, any ensuing contract will not be a distance contract.

(b) The mere fact that an intermediary (acting for the insurance undertaking or for the retail customer) is involved, does not make the sale of a financial product or service a distance contract.

(3) Conclusion of a contract

(a) A contract is concluded when an offer to be bound by the non-investment insurance contract has been accepted. An offer in the course of negotiations (for example, an offer by an insurance undertaking to consider an application) is not an offer to be bound, but is part of a pre-contractual negotiation. A customer will provide all the information an insurance undertaking needs to decide whether to accept a risk and to calculate the premium. The customer may do this orally, in writing or by completing a proposal form. The response by an insurance undertaking, giving a quotation to the customer specifying the premium and the terms, is likely to amount to an offer of the terms on which the insurance undertaking will insure the risk. Agreement by the customer to those terms is likely to be an acceptance which concludes the contract. In other cases where the insurance undertaking requires a signed proposal form (for example, some pure protection contracts), the proposal form may amount to an offer by the customer on which the insurance undertaking decides whether to insure the risk and in such cases the insurance undertaking's response is likely to be the acceptance.
(b) Where the parties to a contract agree that insurance cover should commence before all the terms and conditions have been agreed, the customer should be provided with information required by rules in ICOB to be provided before conclusion of the contract to the extent that agreement has been reached.

(4) Distance non-investment mediation contracts

(a) Some of the services which some insurance intermediaries provide will themselves fall within the scope of the Distance Marketing Directive. ICOB 8 applies to an insurance intermediary which enters into a distance non-investment mediation contract with a retail customer. The FSA expects the requirements in ICOB 8 to be relevant in a small minority of cases. ICOB 8 will not apply in the typical case where an insurance intermediary sells an insurance contract to a retail customer on a one-off basis, even if the insurance intermediary is involved in the renewal of that contract and handling claims under it. ICOB 8 will also not apply if an insurance intermediary, in its terms of business, makes clear that it does not, in conducting insurance mediation activities, act contractually on behalf of, or for, its retail customer, in which case the insurance intermediary can proceed on the basis that no distance non-investment mediation contract will arise.
(b) ICOB 8 is only relevant if both of the following conditions are satisfied:

(i) an insurance intermediary concludes a distance contract with a retail customer covering its insurance mediation activities which is additional to any insurance contract which it is marketing;
(ii) the insurance intermediary's distance contract is concluded other than merely as a stage in the effecting or carrying out of an insurance contract by the firm or another person, in other words it has some continuity independent of an insurance contract, as opposed, for example, to being concluded as part of marketing an insurance contract.

(c) An example of a distance non-investment mediation contract would be a distance contract under which an insurance intermediary agrees to provide advice on a retail customer's insurance needs as and when they arise.

01/11/2007

ICOB 1 Annex 1

Summary of the application of the chapters of ICOB

14/01/2005

This annex belongs to ICOB 1.2.4 G and summarises the application of the various chapters of ICOB to firms that carry on insurance mediation activities. For the detailed application of each chapter, see the application rule at the start of that chapter.

Chapter

Who does the chapter apply to?

ICOB 2 (General rules, including unfair inducements)

(1)

ICOB 2 applies to:
(a) an insurer;
(b) an insurance intermediary;
(c) a managing agent.

(2)

ICOB 2.3, ICOB 2.4, ICOB 2.5, ICOB 2.6, ICOB 2.7 and ICOB 2.8 apply to a firm that communicates or approves a non-investment financial promotion.

ICOB 3 (Financial promotion)

ICOB 3 applies to every firm which communicates or approves a non-investment financial promotion.

ICOB 4 (Advising and selling standards)

(1)

ICOB 4 applies to an insurance intermediary.

(2)

ICOB 4.7 (Unsolicited services) applies to:
(a) an insurer;
(b) a managing agent.

ICOB 5 (Product disclosure)

ICOB 5 applies to:

(1)

an insurer;

(2)

an insurance intermediary other than when introducing;

(3)

a managing agent.

ICOB 6 (Cancellation)

ICOB 6 applies to:

(1)

an insurer;

(2)

a managing agent.

ICOB 7 (Claims handling)

(1)

ICOB 7, except for ICOB 7.6, applies to:
(a) an insurer;
(b) an insurance intermediary;
(c) a managing agent.

(2)

ICOB 7.6 applies in respect of motor vehicle liability insurance business to:
(a) a motor vehicle liability insurer;
(b) the Society.

ICOB 8 (Distance non-investment mediation contracts with retail customers)

ICOB 8 applies to an insurance intermediary.

14/01/2005

ICOB 1 Annex 2

Summary of Handbook provisions for insurance intermediaries

14/01/2005

This table belongs to ICOB 1.5.1 G.

This table sets out the provisions in the Handbook that apply to firms which are insurance intermediaries where they:

(1)

carry on insurance mediation activities in relation to a non-investment insurance contract; or

(2)

communicate or approve a non-investment financial promotion.

It also sets out the provisions in the Handbook that apply to approved persons.

For convenience, the former activity is referred to in the table as (1) and the latter as (2).

Module

Application

High Level Standards

General provisions, GEN

Applies (at least in part) in respect of (1) and (2).

Principles for Businesses, PRIN

Threshold Conditions, COND

Statements of Principle and Code of Practice for Approved Persons, APER

Applies to every approved person who performs a controlled function under an arrangement entered into by an insurance intermediary when doing either (1) or (2).

The Fit and Proper test for Approved Persons, FIT

Applies to an insurance intermediary in respect of any application that it makes for the approval of a person to perform a controlled function, and in respect of the continuing approval of that person.

Senior Management Arrangements, Systems and Controls, SYSC

Applies in respect of (1) and (2), except SYSC 3.2.6A R to SYSC 3.2.6J Gand SYSC 4 - SYSC 10.

Business Standards

Interim Prudential sourcebooks

IPRU(BANK)

Applies in respect of (1) where the insurance intermediary is also a bank.

IPRU(BSOC)

Applies in respect of (1) where the insurance intermediary is also a building society.

IPRU(FSOC)

Applies in respect of (1) where the insurance intermediary is also a friendly society.

IPRU(INS)

Applies in respect of (1) where the insurance intermediary is also an insurer.

IPRU(INV)

Applies in respect of (1) where the insurance intermediary is also an investment firm (other than a BIPRU investment firm).

Prudential sourcebook

GENPRU

Applies in respect of (1) where the insurance intermediary is also a BIPRU firm or insurer.

BIPRU

Applies in respect of (1) where the insurance intermediary is also a BIPRU firm.

MIPRU 1 - MIPRU 4

Applies in respect of (1).

INSPRU

Applies in respect of (1) where the insurance intermediary is also an insurer. Some requirements are relevant to an insurance intermediary doing (1) or (2) where it is also an underwriting agent.

MIPRU 5

Applies in respect of (1) where the insurance intermediary is also an insurer or a mortgage lender.

Market conduct, MAR

Does not apply to a firm when doing either (1) or (2). However, certain chapters of MAR will apply if:
(a) the insurance intermediary also engages in behaviour in relation to qualifying investments traded on prescribed markets - then MAR 1 applies;
(b) the insurance intermediary undertakes or is concerned with offers of securities that may involve price stabilising activity - then MAR 2 applies;
(c) the insurance intermediary carries on designated investment business - then MAR 4 applies.

Conduct of Business sourcebook, COBS

Does not apply to an insurance intermediary when doing (1) or (2) unless it opts to provide a key features documentinstead of a policy summary (see ICOB 5.5.4 R). However, COBS may apply to an insurance intermediary if it also carries on any other regulated activity or communicates or approves a financial promotion not relating to non-investment insurance contracts or qualifying credit.

Mortgages: Conduct of Business sourcebook, MCOB

Does not apply to an insurance intermediary when doing (1) or (2). However, MCOB may apply to an insurance intermediary if it is also a mortgage lender or carries on mortgage mediation activities.

Training and Competence sourcebook, TC

TC applies only in circumstances where an insurance intermediary has employees advising on non-investment insurance contracts with or for a retail customer as listed in TC App 1.

Client Assets sourcebook, CASS

CASS 5 applies when a firm is doing (1) if it receives and holds money from or on behalf of a client, or receives and holds money as agent for an insurance undertaking.

Regulatory processes

[deleted]

Supervision manual, SUP

The following chapters of SUP apply to an insurance intermediary when doing (1) or (2): 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 15, 16, 18 (but only if the insurance intermediary is an insurer), 20.
The following chapters of SUP do not apply to an insurance intermediary when doing (1) or (2): 4, 13, 14, 17, 18 (unless the insurance intermediary is an insurer), 19.

Decision, Procedure and Penalties Manual, DEPP

Applies to an insurance intermediary when doing (1) or (2).

Redress

Dispute resolution: Complaints, DISP

Applies to an insurance intermediary when doing (1) or (2).

Compensation, COMP

An insurance intermediary, as a participant firm for the purposes of COMP in respect of insurance mediation activities relating to non-investment insurance contracts, is liable to contribute to a levy raised by the firm for the purposes of paying compensation.

Specialist sourcebooks

Credit Unions, CRED

Applies to an insurance intermediary doing (1) or (2) where it is also a credit union.

Electronic money, ELM

Does not apply to an insurance intermediary doing (1).
May apply to an insurance intermediary doing (2).

Professional firms, PROF

Applies to an insurance intermediary doing (1) or (2) where it is also a professional firm.

[Deleted]

Collective Investment Schemes sourcebooks, COLL and CIS

Apply to an insurance intermediary doing (1) or (2) where it is also an operator or a depositary of an AUT, ICVC or certain other collective investment schemes.

Recognised Investment Exchanges and Recognised Clearing Houses, REC

Does not apply

Listing, Prospectus and Disclosure

Listing Rules, LR

May apply if the firm is applying for listing in the United Kingdom, is a listed issuer in the United Kingdom, is a sponsor or is applying for approval as a sponsor.

Prospectus Rules, PR

May apply if the firm makes an offer of transferable securities to the public in the United Kingdom or is seeking the admission to trading of transferable securities on a regulated market situated or operating in the United Kingdom.

Disclosure Rules and Transparency Rules, DTR

May apply if the firm is an issuer, any class of whose financial instruments have been admitted to trading on a regulated market, or are the subject of an application for admission to trading on a regulated market, other than issuers who have not requested or approved admission of their financial instruments to trading on a regulated market.

The following Regulatory Guides may also be relevant to insurance intermediaries:
The Perimeter Guidance manual (PERG): see PERG 5 (Guidance on insurance mediation activities)

01/11/2007

ICOB 2

General
rules (including unfair inducements)

ICOB 2.1

Application: who?

14/01/2005

ICOB 2.1.1

(1) This chapter applies to:

(a) an insurer;
(b) an insurance intermediary;
(c) a managing agent.

(2) ICOB 2.3, ICOB 2.4, ICOB 2.5, ICOB 2.6, ICOB 2.7 and ICOB 2.8 apply to a firm that communicates or approves a non-investment financial promotion to which ICOB 3 applies.

14/01/2005

ICOB 2.2

Communication

14/01/2005

ICOB 2.2.1

The purpose of ICOB 2.2.3 R is to restate, in slightly amended form, and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information. This enables a customer, who is a private person, to bring an action for damages under section 150 of the Act (Contravention of rules) to recover loss resulting from a firm referred to in ICOB 2.1.1 R communicating information in the course of regulated activities in a way that is not clear or fair or that is misleading.

14/01/2005

Clear, fair and not misleading communication

ICOB 2.2.3

(1) When a firm communicates information to a customer, it must take reasonable steps to communicate in a way that is clear, fair and not misleading.
(2) Paragraph (1) does not apply to a firm when it communicates a non-investment financial promotion in circumstances in which ICOB 3(Financial promotion) applies to the firm.

14/01/2005

ICOB 2.2.4

When considering how to comply with the requirements of ICOB 2.2.3 R, a firm should have regard to the customer's knowledge of the contract of insurance to which the information relates.

14/01/2005

ICOB 2.2.5

ICOB 2.2.3 R covers all communications with customers, for example, any oral or written statements, telephone calls and any correspondence which is not a non-investment financial promotion to which ICOB 3 (Financial promotion) applies. In respect of non-investment financial promotions, firms should note the separate requirements of ICOB 3.

14/01/2005

ICOB 2.2.6

Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. Where this is the case, the FSA will assess prominence in the context of the communication as a whole. Use can be made of the positioning of text, background and text colour and type size to ensure that specified information meets the requirements of ICOB.

14/01/2005

ICOB 2.2.7

A firm should make every effort to ensure that information is presented clearly, fairly and in a way that does not mislead, whether it is to be viewed as a hard copy, as an electronic document on screen or presented on some other medium (such as audio-tape for visually-impaired customers). A firm should:

(1) use materials and design (including paper size, colour, font type and font size, tone and volume) to present the information legibly and accessibly, and in a balanced way;
(2) use emphasis sparingly; and
(3) not use differential font sizes or positioning so that the impact on a customer of some information (e.g. significant conditions, exclusions from the scope of cover or charges made to customers) is likely to be materially less than other provisions, parts or pages of the document.

14/01/2005

ICOB 2.2.8

A firm which offers general insurance contracts, providing benefits for the customer's care in the event of the customer's disability or incapacity, should avoid using terms which state expressly or imply that the policy will be available for the customer to claim on in the long-term, that is, for any period beyond the expiry of the policy. So a general insurance contract should not be promoted as being capable of providing long-term care insurance for the customer in the long-term, and expressions such as "long-term care" and "lifetime care" should generally be avoided in relation to general insurance contracts. If a general insurance contract provides benefits over the long-term in the event of a claim being made, a firm should make clear that the long-term aspect relates only to the availability of benefits in the event of a claim, not to the duration of the policy itself.

14/01/2005

ICOB 2.3

Inducements

14/01/2005

ICOB 2.3.1

Principles 1 and 6 require a firm to conduct its business with integrity, to pay due regard to the interests of its customers and to treat them fairly. The purpose of ICOB 2.3 is to ensure that a firm does not conduct business under arrangements that might give rise to a conflict with its duty to customers or to unfair treatment of them.

14/01/2005

ICOB 2.3.2

A firm must take reasonable steps to ensure that it, and any person acting on its behalf, does not:

(1) offer, give, solicit or accept an inducement; or
(2) direct or refer any actual or potential business in relation to an insurance mediation activity to another person on its own initiative or on the instructions of an associate;

if it is likely to conflict to a material extent with any duty that the firm owes to its customers in connection with an insurance mediation activity or any duty which such a recipient firm owes to its customers in connection with an insurance mediation activity.

14/01/2005

ICOB 2.3.3

The purpose of ICOB 2.3.2 R(2) is to prevent the requirement in ICOB 2.3.2 R(1) being circumvented by an inducement being given or received by an unregulated associate. There may be instances where a firm is able to demonstrate that it could not reasonably have knowledge of an associate giving or receiving an inducement. It should not, however, direct business to another person on the instruction of an associate if this is likely to conflict with the interests of its customers.

14/01/2005

ICOB 2.3.4

An inducement is a benefit offered to a firm, or any person acting on its behalf, with a view to that firm, or that person, adopting a particular course of action. This can include, but is not limited to, cash, cash equivalents, commission, goods, hospitality or training programmes.

14/01/2005

ICOB 2.3.5

ICOB 2.3.2 R does not prevent a firm:

(1) assisting an insurance intermediary so that the quality of the insurance intermediary's service to customers is enhanced; or
(2) giving or receiving indirect benefits (such as gifts, hospitality or promotional competition prizes);

providing in either case this is not likely to give rise to a conflict with the duties that the recipient owes to the customer. In particular, such benefits should not be of a kind or value that is likely to impair the ability of a firm to act in compliance with any rule in ICOB, for example the suitability requirements in ICOB 4.3 (Suitability).

14/01/2005

ICOB 2.3.6

The inducement offered does not need to be related to the sales process itself. For example, an insurance intermediary has a duty to its customers to act with due care, skill and diligence, where it is acting for them at the claims stage.

14/01/2005

ICOB 2.3.7

(1) ICOB 2.3.2 R states that an inducement will only be considered unfair if it conflicts to a material extent with any duty that the firm owes to its customers. This means that the circumstances surrounding an inducement may determine whether or not it is unfair. It is a firm's responsibility to determine this.
(2) A firm that is offered an inducement should consider whether accepting that inducement might cause it, or any person acting on its behalf, to act in a way which conflicts with the duty that the firm owes to its customers.

14/01/2005

ICOB 2.3.8

(1) Inducements that operate at a distance from the sales process may not be unfair, if they do not have an effect on the sales person's selling of a particular product.
(2) Incentives offered to staff should not encourage sales staff to sell products unsuited to customers' needs.

14/01/2005

ICOB 2.3.9

A firm should have in place its own internal procedures for identifying unfair inducements. For example, it should be able to identify situations where the existence of an inducement has caused a course of action to be adopted, that conflicts to a material extent with any duty that the firm owes to its customers, and which would not have been taken in the absence of the inducement. It should also have in place a mechanism for remedying such situations should they occur.

14/01/2005

ICOB 2.4

Reliance on others

14/01/2005

ICOB 2.4.1

Principle 2 requires a firm to conduct its business with due skill, care and diligence. ICOB 2.4 indicates the extent to which firms that carry on insurance mediation activities and that communicate or approve a non-investment financial promotion can meet this requirement by relying on others.

14/01/2005

ICOB 2.4.2

A firm will be taken to be in compliance with any rule in ICOB that requires a firm to obtain information, to the extent that the firm can show that it was reasonable for it to rely on information provided to it in writing by another person.

14/01/2005

ICOB 2.4.3

(1) In relying on ICOB 2.4.2 R, a firm should take reasonable steps to establish that the other person providing written information:

(a) either:

(i) is not connected with the firm and competent to provide the information; or
(ii) provides information given by the customer or the insurer.

(2) Compliance with (1) may be relied on as tending to establish compliance with ICOB 2.4.2 R.
(3) Contravention of (1) may be relied on as tending to establish contravention of ICOB 2.4.2 R.

14/01/2005

ICOB 2.4.4

(1) Any information which a rule in ICOB requires to be sent to a customer may be sent to another person on the instruction of the customer.
(2) There is no need for a firm to supply information to a customer where it has taken reasonable steps to establish that this has been or will be supplied by another person.

14/01/2005

ICOB 2.5

Exclusion of liability

14/01/2005

ICOB 2.5.1

Principle 6 (Customers' interests) requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm may not exclude the duties it owes or the liabilities it has to a customer under the regulatory system. It may exclude other duties and liabilities only if it is reasonable for it to do so.

14/01/2005

ICOB 2.5.2

A firm must not, in any written or oral communication, seek to exclude or restrict, or to rely on any exclusion or restriction of, any duty or liability it may have to the customer under the regulatory system.

14/01/2005

ICOB 2.5.3

A firm must not in any written or oral communication to a customer, seek to exclude or restrict, or to rely on any exclusion or restriction of, any duty or liability not referred to in ICOB 2.5.2 R unless it is reasonable for it to do so.

14/01/2005

ICOB 2.6

Application to electronic media

14/01/2005

ICOB 2.6.1

GEN 2.2.14 R (References to writing) has the effect that electronic media may be used to make communications that are required by the Handbook to be "in writing" unless a contrary intention appears. In ICOB, the use of an electronic medium is restricted in certain circumstances to a durable medium as required by the Distance Marketing Directive and the Insurance Mediation Directive.

01/11/2007

ICOB 2.6.2

For any electronic communication with a customer in relation to a non-investment insurance contract, a firm should:

(1) have in place appropriate arrangements, including contingency plans, to ensure the secure transmission and receipt of the communication; it should also be able to verify the authenticity and integrity of the communication, together with the date and time sent and received; the arrangements should be proportionate and take into account the different levels of risk in a firm's business;
(2) be able to demonstrate that the customer wishes to communicate using this medium; and
(3) if entering into an agreement, make it clear to the customer that a contractual relationship is created that has legal consequences.

14/01/2005

ICOB 2.6.3

A firm should note that GEN 2.2.14 R does not affect any other legal requirement that may apply in relation to the form or manner of executing a document or agreement.

14/01/2005

ICOB 2.6A

E-Commerce

01/11/2007

Application

ICOB 2.6A.1

This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom with or for a person in the United Kingdom or another EEA State.

01/11/2007

Information about the firm and its products or services

ICOB 2.6A.2

A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:

(1) its name;
(2) the geographic address at which it is established;
(3) the details of the firm, including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;
(4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA register and includes its FSA register number;
(5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:

(a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
(b) the professional title and the EEA State where it was granted;
(c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and

(6) where the firm undertakes an activity that is subject to VAT, its VAT number.

[Note: article 5(1) of the E-Commerce Directive]

01/11/2007

ICOB 2.6A.3

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.

[Note: article 5(2) of the E-Commerce Directive]

01/11/2007

ICOB 2.6A.4

A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:

(1) the commercial communication must be clearly identifiable as such;
(2) the person on whose behalf the commercial communication is made must be clearly identifiable;
(3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
(4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.

[Note: article 6 of the E-Commerce Directive]

01/11/2007

ICOB 2.6A.5

An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.

[Note: article 7(1) of the E-Commerce Directive]

01/11/2007

Requirements relating to the placing and receipt of orders

ICOB 2.6A.6

A firm must (except when otherwise agreed by parties who are not consumers):

(1) give an ECA recipient at least the following information, clearly, comprehensibly and unambiguously, and before the order is placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract;
(b) whether or not the concluded contract will be filed by the firm and whether it will be accessible;
(c) the technical means for identifying and correcting input errors before the placing of the order; and
(d) the languages offered for the conclusion of the contract;

(2) indicate any relevant codes of conduct to which it subscribes and information on how those codes can be consulted electronically;
(3) (when an ECA recipient places an order through technological means), acknowledge the receipt of the recipient's order without undue delay and by electronic means (an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them); and
(4) make available to an ECA recipient, appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors before the placing of an order.

[Note: articles 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive]

01/11/2007

ICOB 2.6A.7

Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.

[Note: article 10(3) of the E-Commerce Directive]

01/11/2007

Exception: contract concluded by e-mail

ICOB 2.6A.8

The requirements relating to the placing and receipt of orders do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.

[Note: article 10(4) and 11(3) of the E-Commerce Directive]

01/11/2007

ICOB 2.7

General provision related to distance contracts

14/01/2005

ICOB 2.7.1

During the course of a distance contract with a retail customer, the making of which constitutes or is part of a non-investment insurance contract:

(1) the firm must, at the retail customer's request, provide a paper copy of the contractual terms and conditions of the non-investment insurance contract; and
(2) the firm must comply with the retail customer's request to change the means of distance communication used, unless this is incompatible with the non-investment insurance contract concluded or the service being provided by the firm.

01/11/2007

ICOB 2.7.2

A firm must ensure that information provided to a retail customer before the conclusion of a distance contract about his contractual obligations under that contract conforms with the contractual obligations that would be imposed on him under the law applying if the contract were concluded.

14/01/2005

ICOB 2.8

Record keeping

14/01/2005

ICOB 2.8.1

General record-keeping standards, which continue to apply, can be found in SYSC 3.2.20 R. ICOB 2.8 provides further details of the standard expected of firms where there is an obligation in ICOB requiring firms to maintain adequate records to evidence compliance. An overall view of the record-keeping requirements in ICOB is in ICOB Sch 1.

14/01/2005

ICOB 2.8.2

The records required in ICOB must be readily accessible for inspection by the FSA.

14/01/2005

ICOB 2.8.3

A record would be "readily accessible" if it was available for inspection within two business days of the request being received.

14/01/2005

ICOB 2.8.4

Where a firm keeps standard, generic documents as records it should be able to identify which version, by date or reference number, was provided to the customer.

14/01/2005

ICOB 2.8.5

(1) A firm may arrange for records to be kept in such form as it chooses provided the record is readily accessible for inspection by the FSA.
(2) Where a firm chooses to maintain records in electronic form, it should take reasonable steps to ensure that:

(a) the electronic record accurately records the original information; and
(b) the electronic record cannot be subject to unauthorised or accidental alteration.

14/01/2005

ICOB 2.8.6

Each rule in ICOB that requires a record to be made and retained specifies that the record must be kept for a minimum period of three years. A firm should consider retaining records for longer periods in case customers complain or take legal action against the firm. A firm should, in particular, consider what constitutes an appropriate retention period for records which relate to non-investment insurance contracts which may give rise to claims some time after the inception of the contract (e.g. employers' liability insurance).

14/01/2005

ICOB 2.9

Communications with customers

14/01/2005

ICOB 2.9.1

Where a non-investment insurance contract is effected jointly, the information required by any rule in ICOB may be sent only to the first-named customer.

14/01/2005

ICOB 2.10

Excessive charges to retail customers

06/03/2006

ICOB 2.10.1

An insurance intermediary must ensure that its charges to a retail customer are not excessive.

06/03/2006

ICOB 2.10.2

When determining whether a charge is excessive, an insurance intermediary should consider:

(1) the amount of its charges for the services or product in question, compared with charges for similar services or products in the market;
(2) whether the charges are an abuse of the trust that the retail customer has placed in the insurance intermediary; and
(3) the nature and extent of the disclosure of the charges to the retail customer.

06/03/2006

ICOB 2.10.3

In assessing whether an insurance intermediary's charges are excessive, the FSA will take account of the charges imposed by insurance intermediaries of similar size and that conduct a similar volume of business.

06/03/2006

ICOB 2.10.4

ICOB 2.10.1 R does not apply to premiums, but does cover fees (including any fees that an insurance intermediary charges where it receives no commission from an insurer in respect of the contract of insurance).

06/03/2006

ICOB 3

Financial
promotion

ICOB 3.1

Application: general

14/01/2005

ICOB 3.1.1

(1) ICOB 3.2.1 R states that this chapter applies generally to firms in relation to all non-investment financial promotions. But, this wide application is cut back by ICOB 3.3(Application: what?) and ICOB 3.4(Application: where?) which limit the application of this chapter for:

(a) non-investment financial promotions which fall within the scope of the exemptions in the Financial Promotion Order or the additional exemptions set out in ICOB 3.3.6 R; and
(b) non-investment financial promotions to persons outside the United Kingdom.

(2) ICOB 3.1.2 G contains a table summarising some of the exemptions in the Financial Promotion Order that are likely to be of particular interest to firms. A firm which communicates or approves only financial promotions that fall within an exemption need not concern itself with ICOB 3.

14/01/2005

ICOB 3.1.2

Financial Promotion Order exemptions.

This table belongs to ICOB 3.1.1 G (2). In this table references to 'relevant insurance activity' are to effecting and carrying out a non-investment insurance contract as principal.

Financial Promotion Order article no. and name of exemption

Summary of exemption

Article 17 (Generic promotions)

A non-investment financial promotion that does not identify (directly or indirectly) an insurer or any person as a person who carries on a controlled activity in relation to a non-investment insurance contract is exempt from ICOB. So an insurance intermediary advertising insurance mediation services is exempt from ICOB 3 providing the advertisement does not name an insurer. This is because the activities of the insurance intermediary do not constitute controlled activities.
For further guidance see PERG 8.12.14G to PERG 8.12.17G.

Article 24 (Relevant insurance activity: non-real time communications)

A non-investment financial promotion which contains the following information is exempt from ICOB 3:
(1) the full name of the insurance undertaking;
(2) the country or territory in which the insurance undertaking is incorporated (described as such);
(3) if different from (2), the country or territory in which the insurance undertaking's principal place of business is situated (described as such);
(4) whether or not the insurance undertaking is regulated in respect of its insurance business;
(5) if the insurance undertaking is regulated, the name of the regulator in its principal place of business or, if there is more than one regulator, the name of the prudential regulator;
(6) whether any transaction to which the non-investment financial promotion relates would be covered by a dispute resolution scheme or compensation scheme, if so identifying each such scheme.

Article 25 (Relevant insurance activity: non-real time communications: reinsurance and large risks)

A non-investment financial promotion which concerns only a reinsurance contract or a contract of large risks is exempt from ICOB 3.

Article 26 (Relevant insurance activity: real time communications)

ICOB 3 does not apply to a non-investment financial promotion which is communicated in the course of a personal visit, telephone conversation or other interactive dialogue. This does not include interactive dialogue by means of the exchange of letters or emails or in a publication. Such communication will be deemed to be non-real time and will be subject to ICOB 3, unless another exemption applies. For further guidance see PERG 8.10.2G.

01/07/2005

ICOB 3.1.3

A communication may contain both a non-investment financial promotion and one or more financial promotions of other products, for example, a leaflet from a firm which describes the range of insurance, savings and mortgage products it provides. In such cases, the financial promotion rules in this, the Conduct of Business and the Mortgages and Home Finance: Conduct of Business sourcebooks will all be relevant.

06/04/2007

ICOB 3.2

Application: who?

14/01/2005

ICOB 3.2.1

This chapter applies to every firm which communicates or approves a non-investment financial promotion.

14/01/2005

Appointed representatives

ICOB 3.2.2

Under section 39(3) of the Act, a firm is responsible for financial promotions communicated by its appointed representatives when acting as such (see ICOB 1.6 (Appointed representatives)).

14/01/2005

Nationals of other EEA States

ICOB 3.2.3

A national of an EEA State (other than the United Kingdom) wishing to take advantage of the exemption in article 36 of the Financial Promotion Order in relation to any controlled activity lawfully carried on by him in that State, should act in conformity with the rules in this chapter.

14/01/2005

Authorised professional firms

ICOB 3.2.4

(1) ICOB 3 does not apply to an authorised professional firm in relation to the communication of a non-investment financial promotion if the following conditions are satisfied:

(a) the firm's main business is the practice of its profession (see IPRU(INV) 2.1.2R(3));
(b) the non-investment financial promotion is made for the purposes of and incidental to the promotion or provision by the firm of:

(i) its professional services; or
(ii) its non-mainstream regulated activities (see PROF 5.2); and

(c) the non-investment financial promotion is not communicated on behalf of another person who would not be able lawfully to communicate the non-investment financial promotion if he were acting in the course of business.

(2) In (1)(b)(i), "professional services" means services:

(a) which do not constitute a regulated activity; and
(b) the provision of which is supervised and regulated by a designated professional body.

14/01/2005

ICOB 3.2.5

Authorised professional firms are reminded that, in circumstances in which ICOB 3 does not apply to the firm, ICOB 2.2.3 R(Clear, fair and not misleading communication) may apply.

14/01/2005

ICOB 3.3

Application: what?

14/01/2005

What do "communicate" and "non-investment financial promotion" mean?

ICOB 3.3.1

The rules in this chapter adopt various concepts from the restriction on financial promotion by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction is contained in PERG 8 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:

(1) "communicate" is in PERG 8.6 (Communicate);
(2) "invitation or inducement" and "engage in investment activity" (two elements which, with "communicate", make up the definition of "financial promotion") are in PERG 8.4 (Invitation and inducement) and PERG 8.7 (Engage in investment activity).

01/07/2005

Definition of "non-investment financial promotion".

ICOB 3.3.2

The rules in this chapter apply to non-investment financial promotions only. These are financial promotions which relate to non-investment insurance contracts. A non-investment financial promotion is, by definition, not a real time financial promotion.

14/01/2005

Media of communication

ICOB 3.3.3

(1) There is no restriction on the media of communication to which this chapter applies. It applies to a non-investment financial promotion communicated by any means, including by way of printed advertising, radio and television broadcast, e-mail, the Internet and electronic media such as digital and other forms of interactive television and media. Both solicited and unsolicited communications are covered.
(2) Financial promotions may be communicated, for example, by means of:

(a) product brochures;
(b) general advertising in magazines, newspapers, radio and television programmes and websites;
(c) mailshots (whether distributed by post, fax, e-mail or other media);
(d) written correspondence;
(e) sales aids which themselves constitute a financial promotion; and
(f) other publications, which may contain non-personal recommendations as to the acquisition, retention or disposal of non-investment insurance contracts.

14/01/2005

ICOB 3.3.4

Guidance on the use of the Internet for communicating non-investment financial promotions is in ICOB 3.9 (The Internet and other electronic media) and PERG 8.22 (The Internet).

01/07/2005

Exemptions

ICOB 3.3.5

This chapter does not apply to a firm in relation to a non-investment financial promotion of a kind listed in ICOB 3.3.6 R.

14/01/2005

ICOB 3.3.6

Exemptions

This table belongs to ICOB 3.3.5 R.

Exemptions

This chapter does not apply to the following:

(1)

a non-investment financial promotion to a commercial customer, that is a non-investment financial promotion which:

(a)

is made only to recipients who the firm has taken reasonable steps to establish are commercial customers; or

(b)

may reasonably be regarded as directed only at recipients who are commercial customers;

(2)

a non-investment financial promotion which can lawfully be communicated by an unauthorised communicator without approval;

(3)

a non-investment financial promotion communicated from outside the United Kingdom which would be exempt under articles 30, 31, 32 or 33 of the Financial Promotion Order (Overseas communicators) if the office from which the non-investment financial promotion is communicated were a separate unauthorised person (but see ICOB 4.2.19 R) (Overseas business for UK retail customers) and GEN 4.4 (Business for retail clients from non-UK offices);

(4)

a "one-off" non-investment financial promotion: if the conditions set out in (a) to (c) are satisfied, a non-investment financial promotion is to be regarded as "one-off"; if not, the fact that any one or more of these conditions is met is to be taken into account in determining if a non-investment financial promotion is "one-off", but a non-investment financial promotion may be regarded as "one-off" even if none of the conditions are met. The conditions are that:

(a)

the non-investment financial promotion is communicated only to one recipient or only to one group of recipients in the expectation that they would engage in any investment activity jointly;

(b)

the identity of the contract or service to which the non-investment financial promotion relates has been determined having regard to the particular circumstances of the recipient ;

(c)

the non-investment financial promotion is not part of an organised marketing campaign;

(5)

a non-investment financial promotion which contains only one or more of the following:

(a)

the name of the firm (or its appointed representative);

(b)

the name of the non-investment insurance contract;

(c)

a logo;

(d)

a contact point (address (including an e-mail address), telephone or fax number);

(e)

a brief, factual description of the firm's (or its appointed representative's) activities;

(f)

a brief, factual description of the firm's (or its appointed representative's fees;

(g)

a brief, factual description of the firm's products.

01/11/2007

Combination of exemptions

ICOB 3.3.7

A firm may rely on more than one exemption (and also on ICOB 3.4.1 R (Territorial scope)) in relation to the same non-investment financial promotion.

14/01/2005

Guidance on the exemptions

ICOB 3.3.8

(1) Under ICOB 3.3.6 R(1), a non-investment financial promotion which is communicated only to a commercial customer is exempt. See ICOB 3.6.3 R and ICOB 3.6.4 R which amplify this exemption. A firm will need to take particular note of the conditions in ICOB 3.6.4 R when designing non-investment financial promotions for trade publications that may also be available to a retail customer.
(2) ICOB 3.3.6 R(4) reflects the exemption in article 28 of the Financial Promotion Order (one-off non-real time communications and solicited real time communications) but goes further, exempting all such non-investment financial promotions. It exempts, among other things, correspondence which is specifically written for a recipient, whether hard copy or e-mail. A firm should note, however, that such correspondence will, if personal recommendations are made, be subject to other obligations such as ICOB 4.3 and ICOB 4.4. It does not exempt non-investment financial promotions communicated in the form of mass mailshots, which may appear to be items of personalised correspondence but which in fact comprise the same, or virtually the same, material sent to a number of recipients, without tailoring the material to the circumstances of each recipient. Such mailshots must meet the requirements of ICOB 3. PERG 8.14.3G (One-off financial promotions (articles 28 and 28A)) provides further guidance on the scope of the exemption in article 28.
(3) ICOB 3.3.6 R(5)(e), (f ) and (g) exempt a non-investment financial promotion made by a firm which refers only to its activities in general terms in image advertising. Acceptable examples include 'general insurance' or 'life and general insurance business'. In addition a firm or its appointed representative may include its name, address and telephone number in accordance with ICOB 3.3.6 R(5)(a) and (d). PERG 8.4.20G (Image advertising) provides guidance on when image advertising may involve a financial promotion.
(4) A non-investment financial promotion included in a newspaper, magazine or periodical which is printed and published overseas, but which may be brought into the United Kingdom and made available to persons in the United Kingdom, will be exempt provided that the non-investment financial promotion is not communicated to persons inside the United Kingdom (see ICOB 3.4 and PERG 8.12.2G (Financial promotions to overseas recipients (article 12)).

01/07/2005

Other Handbook rules relevant to financial promotions

ICOB 3.3.9

(1) A firm is reminded that non-investment financial promotions (including those which are exempt) may be subject to more general rules including Principle 7 (Communications with clients), SYSC (Systems and controls) ICOB 2.2.3 R (Clear, fair and not misleading communication) and ICOB 5 (Product disclosure).
(2) A firm is reminded that, although ICOB 3 makes no specific rules relating to the content of a non-investment financial promotion, the disclosure requirements in ICOB 4 and ICOB 5 may apply.
(3) A firm is reminded that if, in the course of making a non-investment financial promotion of any kind, it gives a personal recommendation to a customer about the suitability of a non-investment insurance contract for that individual, the firm is subject to the relevant rules on advising and selling in ICOB 4 (Advising and selling standards).

01/01/2007

ICOB 3.4

Application: where?

14/01/2005

Territorial scope

ICOB 3.4.1

This chapter applies to a firm in relation to the communication, or approval, of a non-investment financial promotion to:

(1) a person in the United Kingdom; and
(2) (if the financial promotion is an electronic commerce communication made from an establishment in the United Kingdom) a person in an EEA State other than the United Kingdom.

01/11/2007

ICOB 3.4.2

(1) The application under ICOB 3.4.1 R is relevant both when a firm communicates a non-investment financial promotion itself and when a firm approves a non-investment financial promotion for communication by others. But see also ICOB 3.4.3 R.
(2) The exemptions in ICOB 3.3.6 R (Application: what?; Exemptions) also incorporate some territorial elements. In particular, the exemption for financial promotions originating outside the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see ICOB 3.3.6 R(2)) and PERG 8.12.2G (Financial promotions to overseas recipients (article 12)), the exemptions for overseas communicators (see ICOB 3.3.6 R(3)) and the exemption for electronic commerce communications made from an establishment in an EEA State other than the United Kingdom to an ECA recipient in the United Kingdom (see PERG 8.12.38G (Incoming electronic commerce communication article 20B)).
(3) [deleted]

01/11/2007

Exceptions to territorial scope

ICOB 3.4.3

Notwithstanding ICOB 3.4.1 R, the following parts of this chapter apply without any territorial limitation if a firm approves a non-investment financial promotion:

(1) ICOB 3.1 to ICOB 3.6 (Application, Purpose and General); and
(2) ICOB 3.8.1 R (1) (Non-investment financial promotions: clear, fair and not misleading: comparisons).

01/11/2007

Meaning of "communicated to a person inside or outside the United Kingdom"

ICOB 3.4.4

For the purposes of this chapter:

(1) a non-investment financial promotion is communicated to a person outside the United Kingdom if it is:

(a) made to a person who receives it outside the United Kingdom; or
(b) directed only at persons outside the United Kingdom; and

(2) a non-investment financial promotion is communicated to a person inside the United Kingdom if it is communicated to a person other than as described in (1);

and see ICOB 3.4.5 R and ICOB 3.6.3 R, which amplify this rule.

14/01/2005

Meaning of "directed only at persons outside the United Kingdom"

ICOB 3.4.5

(1) If the conditions set out in 4(a), (b), (c) and (d) are met, a non-investment financial promotion directed from a place inside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
(2) If the conditions set out in 4(c) and (d) are met a non-investment financial promotion directed from a place outside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
(3) In any other case where one or more of the conditions in 4(a) to (e) is met, that fact will be taken into account in determining whether a non-investment financial promotion is directed only at persons outside the United Kingdom (but a non-investment financial promotion may still be regarded as directed only at persons outside the United Kingdom even if none of these conditions is met).
(4) The conditions are that:

(a) the non-investment financial promotion is accompanied by an indication that it is directed only at persons outside the United Kingdom;
(b) the non-investment financial promotion is accompanied by an indication that it must not be acted upon by persons in the United Kingdom;
(c) the non-investment financial promotion is not referred to in, or directly accessible from, any other non-investment financial promotion which is made to a person or directed at persons in the United Kingdom by the same person;
(d) there are in place proper systems and procedures to prevent recipients in the United Kingdom (other than those to whom the non-investment financial promotion might otherwise lawfully have been made) engaging in the investment activity to which the non-investment financial promotion relates with the person directing the non-investment financial promotion, a close relative of his or a member of the same group; and
(e) the non-investment financial promotion is included in:

(i) a website, newspaper, journal, magazine or periodical publication which is principally accessed in or intended for a market outside the United Kingdom;
(ii) a radio or television broadcast or teletext service transmitted principally for reception outside the United Kingdom.

01/10/2005

ICOB 3.5

Purpose

14/01/2005

ICOB 3.5.1

(1) Section 21(1) of the Act (Restrictions on financial promotion) imposes a restriction on the communication of financial promotions (non-investment financial promotions in ICOB) by unauthorised persons. A person must not, in the course of business, communicate a non-investment financial promotion unless:

(a) he is an authorised person; or
(b) the content of the non-investment financial promotion is approved by an authorised person.

(2) However, the Financial Promotion Order exempts from the restriction created by section 21(1) of the Act certain types of financial promotion.

14/01/2005

ICOB 3.5.2

(1) The purpose of this chapter is to provide rules and guidance for a firm that wishes to communicate or approve a non-investment financial promotion. PERG 8 (Financial promotion and related activities) provides further detailed guidance on the financial promotion regime under section 21 of the Act (Financial promotion) which will be relevant in interpreting these rules.
(2) This chapter amplifies, for activities within its scope:

(a) Principle 6 (Customers' interests) which requires a firm to pay due regard to the interests of its customers and treat them fairly; and
(b) Principle 7 (Communications with clients) which requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.

01/07/2005

ICOB 3.6

General

14/01/2005

Other regulations and guidelines

ICOB 3.6.1

A firm communicating a non-investment financial promotion may also be subject to other regulations and guidelines, outside the remit of the FSA, such as:

(1) the codes issued from time to time by the Advertising Standards Authority;
(2) regulations from any overseas regulator (where relevant) if the firm intends to market from the United Kingdom into any other country; and
(3) the Privacy and Electronic Communication (EC Directive) Regulations 2003 (SI 2003/2426).

14/01/2005

Non-investment financial promotions

ICOB 3.6.2

(1) A non-investment financial promotion includes a financial promotion for a non-investment insurance contract made by letter or e-mail or contained in a newspaper, journal, magazine, other periodical publication, website, television or radio programme, or teletext service.
(2) The following are to be regarded as indications that a financial promotion for a non-investment insurance contract is a non-investment financial promotion rather than a real time financial promotion:

(a) the financial promotion is communicated to more than one person in identical terms (save for details of the recipient's identity);
(b) the financial promotion is communicated by way of a system which in the normal course constitutes or creates a record of the communication which is available to the recipient to refer to at a later time; and
(c) the financial promotion is communicated by way of a system which in the normal course does not enable or require the recipient to respond immediately to it.

14/01/2005

Meaning of "made", "directed at" and "recipient" in this chapter

ICOB 3.6.3

In accordance with article 6 of the Financial Promotion Order (Interpretation: communications) any reference in this chapter to:

(1) a communication being made to another person is a reference to a communication being addressed in legible form to a particular person or persons (for example, where it is contained in a letter);
(2) a communication being directed at persons is a reference to a communication being addressed to persons generally (for example where it is contained in a television broadcast or website); and
(3) a recipient of a communication is the person to whom the communication is made or, in the case of a financial promotion which is directed at persons generally, any person who reads or hears the communication.

14/01/2005

When is a financial promotion "directed only at" certain persons?

ICOB 3.6.4

(1) This rule applies for the purposes of determining whether a communication is directed only at commercial customers under ICOB 3.3.6 R(1).
(2) If all the conditions set out in (4) are met, a communication is to be regarded as directed as in (1).
(3) In any other case in which one or more of those conditions is met, that fact is to be taken into account in determining whether the communication is directed as in (1) (but a communication may still be regarded as so directed even if none of the conditions in (4) are met).
(4) The conditions are that:

(a) the communication includes an indication of the description of persons to whom it is directed and an indication of the fact that the contract to which it relates is available only to such persons;
(b) the communication includes an indication that persons of any other description should not rely upon it; and
(c) there are in place proper systems and procedures to prevent recipients other than persons to whom it is directed entering into the contract to which the communication relates with the person directing the communication, a close relative of his or a member of the same group.

14/01/2005

ICOB 3.7

Confirmation of compliance

14/01/2005

Confirmation of compliance

ICOB 3.7.1

(1) Before a firm communicates or approves a non-investment financial promotion, it must confirm that the non-investment financial promotion complies with the rules in this chapter.
(2) A firm must arrange for the confirmation exercise in (1) to be carried out by an individual or individuals with appropriate expertise.

14/01/2005

ICOB 3.7.2

(1) In ICOB 3.7.1 R(2) 'appropriate expertise' will vary depending on the complexity of the financial promotion and the non-investment insurance contract to which it relates. The individuals engaged by a firm to confirm the compliance of its financial promotions with this chapter may have different levels of expertise and therefore a different level of authority for confirmation depending on the type of financial promotion and the non-investment insurance contract involved.
(2) A firm may arrange for a third party with appropriate expertise to carry out the confirmation exercise on the firm's behalf, but the responsibility for the non-investment financial promotion remains with the firm.

14/01/2005

Withdrawing confirmation

ICOB 3.7.3

If, at any time after it has completed a confirmation exercise in ICOB 3.7.1 R(1) a firm becomes aware that a non-investment financial promotion no longer complies with the rules in this chapter, it must ensure that the non-investment financial promotion is withdrawn as soon as reasonably practicable by:

(1) ceasing to communicate it;
(2) withdrawing its approval (if applicable); and
(3) notifying any person that the firm knows to be relying on its approval (if applicable) or confirmation (under ICOB 3.7.5 R).

14/01/2005

ICOB 3.7.4

(1) ICOB 3.7.3 R is of particular importance to a non-investment financial promotion, such as a product brochure, that a firm uses over a period of time. It has little application to a non-investment financial promotion which is of its nature ephemeral, for example, a mobile phone text message. Further, a non-investment financial promotion which clearly speaks as at a particular date will not cease to comply with the rules in this chapter merely because the passage of time has rendered it out-of-date.
(2) For compliance with ICOB 3.7.3 R the FSA will expect a firm to monitor its relevant non-investment financial promotions as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant non-investment financial promotion with a 'review date', a date at which the non-investment financial promotion should be checked once more against the rules of this chapter. If it is found no longer to meet these requirements it should be withdrawn as soon as reasonably practicable.
(3) If at any time a firm becomes aware that a retail customer may have been misled by a non-investment financial promotion it should consider whether the retail customer who has responded to the non-investment financial promotion should be contacted with a view to explaining the position and offering any appropriate form of redress to those who have suffered financial loss.

14/01/2005

Communicating a financial promotion where another firm has confirmed compliance

ICOB 3.7.5

A firm will not contravene any of the rules in this chapter in the circumstances where it (firm "A") communicates a non-investment financial promotion which has been produced by another person provided that:

(1) A takes reasonable care to establish that another firm (firm "B") has already confirmed the compliance of the non-investment financial promotion in accordance with ICOB 3.7.1 R;
(2) A takes reasonable care to establish that A communicates the non-investment financial promotion only to recipients of the type for whom it was intended at the time B carried out the confirmation exercise; and
(3) so far as A is, or ought to be, aware:

(a) the non-investment financial promotion has not ceased to be clear, fair and not misleading since that time; and
(b) B has not withdrawn the non-investment financial promotion.

14/01/2005

ICOB 3.8

Form and content of non-investment financial promotions

14/01/2005

Clear, fair and not misleading: comparisons

ICOB 3.8.1

(1) A firm must be able to show that it has taken reasonable steps to ensure that a non-investment financial promotion is clear, fair and not misleading.
(2) A non-investment financial promotion which includes a comparison or contrast must:

(a) compare contracts meeting the same needs or which are intended for the same purpose;
(b) objectively compare one or more material, relevant, verifiable and representative features of those contracts, which may include price;
(c) not create confusion in the marketplace between the firm itself (or the person whose non-investment financial promotion it approves) and a competitor or between the firm's trademarks, trade names, other distinguishing marks, contracts or services (or those of the person whose non-investment financial promotion it approves) and those of a competitor;
(d) not discredit or denigrate the trademarks, trade names, other distinguishing marks, contracts, services, activities or circumstances of a competitor;
(e) not take unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor;
(f) not present contracts as imitations or replicas of contracts bearing a protected trademark or trade name; and
(g) indicate in a clear and unequivocal way in any comparison referring to a special offer the date on which the offer ends or, where appropriate, that the special offer is subject to the availability of the contracts and services, and, where the special offer has not yet begun, the date of the start of the period during which the special price or other specific conditions shall apply.

(3) [deleted]

06/11/2006

ICOB 3.8.2

(1) A firm should take reasonable steps to ensure that, for a non-investment financial promotion:

(a) its promotional purpose is not in any way disguised or misrepresented;
(b) any statement of fact, promise or prediction is clear, fair and not misleading and discloses any relevant assumptions;
(c) any statement of opinion is honestly held and, unless consent is impracticable, given with the consent of the person concerned;
(d) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
(e) it does not contain any false indications, in particular as to:

(i) the firm's independence;
(ii) the firm's resources and scale of activities; or
(iii) the scarcity of any contract;

(f) the design, content or format does not disguise, obscure or diminish the significance of any statement, warning or other matter which the non-investment financial promotion is required by this chapter to contain;
(g) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));
(h) it does not omit any matters the omission of which causes the non-investment financial promotion not to be clear, fair and not misleading; and
(i) the accuracy of all material statements of fact in it can be substantiated.

(a) Compliance with ICOB 3.8.2 E(1) may be relied on as tending to show compliance with ICOB 3.8.1 R(1).
(b) Contravention of ICOB 3.8.2 E(1) may be relied on as tending to show contravention of ICOB 3.8.1 R(1).

14/01/2005

Guidance on clear, fair and not misleading

ICOB 3.8.3

(1) It cannot be assumed that recipients necessarily have an understanding of the contract being promoted. If a non-investment financial promotion is specially designed for a targeted collection of recipients who are reasonably believed to have particular knowledge of the contract being promoted, this fact should be made clear.
(2) In relation to quotations of opinion:

(a) where only part of an opinion is quoted, it should nevertheless be a fair representation; and
(b) any connection between the holder of the opinion and the firm should be made clear.

(3) Firms should avoid the use of small print to qualify prominent claims.
(4) If a firm communicates a non-investment financial promotion which contains a quotation of premium and it is unable to give the retail customer a precise quotation it should ensure that the premium quoted is representative of the premium that would be charged for a person in a similar position to the retail customer.
(5) Unless the firm is prepared to give a precise quotation, the non-investment financial promotion should be accompanied by a prominent statement making clear that the premium quoted is an estimate only and that the actual premium will depend on individual circumstances.
(6) Where a non-investment financial promotion indicates or implies that a firm can:

(a) reduce the premium; or
(b) provide the cheapest premium; or
(c) reduce a retail customer's costs;

it should include a prominent statement of the basis on which the reduction is to be achieved. The FSA will assess prominence in the context of the non-investment financial promotion as a whole. Use can be made of the positioning of text, background and text colour and type size to ensure that ICOB 3.8.1 R(1) is satisfied.
(7) Where (6) applies, and there are significant limitations on any savings, these should be given equal prominence in the non-investment financial promotion to the claimed savings. For example, if the non-investment financial promotion states that a firm can achieve a premium reduction in the form of either a percentage or monetary amount, but the saving is only available if the retail customer meets certain specific criteria, the criteria should be given equal prominence and not placed in small print.
(8) A firm which offers general insurance contracts, providing benefits for the customer's care in the event of the customer's disability or incapacity, should avoid using terms which state expressly or imply that the policy will be available for the customer to claim on in the long-term, that is, for any period beyond the expiry of the policy. So a general insurance contract should not be promoted as being capable of providing long-term care insurance for the customer in the long-term, and expressions such as "long-term care" and "lifetime care" should generally be avoided in relation to general insurance contracts. If a general insurance contract provides benefits over the long-term in the event of a claim being made, a firm should make clear that the long-term aspect relates only to the availability of benefits in the event of a claim, not to the duration of the policy itself.

01/01/2006

ICOB 3.9

The Internet and other electronic media

14/01/2005

ICOB 3.9.1

This section contains guidance on the use of the Internet and other electronic media to communicate financial promotions. Firms are also referred to the guidance in ICOB 2.6 (Application to electronic media).

14/01/2005

Approach and general guidance

ICOB 3.9.2

Any material which meets the definition of a non-investment financial promotion, including any video or moving image material incorporated in any website containing a non-investment financial promotion, should comply with the rules in this chapter. See PERG 8.22 (The Internet) for further guidance on non-investment financial promotions on the Internet, including the treatment of hyperlinks and banners.

01/07/2005

ICOB 3.9.3

(1) Before using the Internet, digital or any other form of interactive television or other electronic media to promote its services a firm should refer to legislation such as the Data Protection Act 1998 and the Computer Misuse Act 1990, as well as to this chapter.
(2) When designing websites and other electronic media, firms should be aware of the difficulties that can arise when reproducing certain colours and printing certain types of text. These difficulties could cause problems with the presentation and retrieval of required information. Any non-investment financial promotion communicated by the Internet, digital or other forms of interactive television is subject to the requirements set out in ICOB 3.8 as applicable.

14/01/2005

Specific guidance

ICOB 3.9.4

The FSA's website http://www.fsa.gov.uk contains a wide range of information, including pages of specific relevance to customers. Firms may, if they wish, include a reference or hyperlink to the FSA's website; this will not, however, replace any requirements of ICOB 3.

14/01/2005

ICOB 4

Advising
and selling standards

ICOB 4.1

Application and purpose

14/01/2005

Application: who and what?

ICOB 4.1.1

(1) Subject to ICOB 4.1.4 R, this chapter applies to an insurance intermediary in accordance with ICOB 4.1.3 R.
(2) ICOB 4.7 (Unsolicited services) also applies to an insurer or managing agent when acting as a product provider.
(3) Throughout this chapter, references to an insurer apply equally to a managing agent.

14/01/2005

ICOB 4.1.2

(1) The definition of insurance intermediary includes an insurer when the insurer is carrying on insurance mediation activities, for example when, through its sales force, it advises on or arranges its own non-investment insurance contracts or those of another insurer.
(2) For the limited application of this chapter to authorised professional firms in respect of their non-mainstream regulated activities, see ICOB 1.2.10 R(3) and ICOB 1.2.10 R(4).

14/01/2005

ICOB 4.1.3

Application of ICOB 4 by activity and customer type

This table belongs to ICOB 4.1.1 R.

Insurance mediation activity

Type of customer

Applicable section

arranging except introducing

retail customer

Whole chapter except ICOB 4.3 and ICOB 4.6

arranging except introducing

commercial customer

Whole chapter except ICOB 4.2.19 R, ICOB 4.3 and ICOB 4.7

advising

retail customer

Whole chapter except ICOB 4.6

advising

commercial customer

Whole chapter except ICOB 4.2.19 R and ICOB 4.7

introducing

retail customer and commercial customer

ICOB 4.2.9 R and ICOB 4.2.10 G only

06/03/2006

ICOB 4.1.4

The following provisions in ICOB do not apply to an insurance intermediary that is an insurer:

(1) ICOB 4.2 (Status disclosure) except ICOB 4.2.4 G to ICOB 4.2.7 R (permitting use of the initial disclosure document and combined initial disclosure document) and ICOB 4.2.19 R (overseas business for UK retail customers), provided that when providing the service on the telephone to a retail customer wishing to enter into a non-investment insurance contract, the insurer proceeds on the basis of providing at least the following information:

(a) its name;
(b) (if it initiated the call) the commercial purpose of the call; and
(c) the identity of the person in contact with the customer and his link with the insurer;

(2) ICOB 4.4.1R (1) (Statement of demands and needs), in accordance with ICOB 4.4.2R (1) and (1A) (commercial customers and non-advised sales to retail customers); and
(3) ICOB 4.6 (Commission disclosure for commercial customers).

However, an insurer must ensure that its appointed representative nevertheless complies with the requirements of this chapter (unless acting as the insurer's third party processor).

06/03/2006

Renewals

ICOB 4.1.5

When a contract of insurance is renewed, the parties enter into a new contract of insurance, even if the terms and conditions of the new contract are identical to the old one. ICOB 4 therefore applies to the renewed contract of insurance as it would to the original contract of insurance, unless stated otherwise in ICOB 4.2.20 R.

14/01/2005

Purpose

ICOB 4.1.6

(1) This chapter amplifies Principle 6 (Customer's interests), Principle 7 (Communications with clients) and Principle 9 (Customers: relationships of trust). Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. Principle 7 requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading. Principle 9 requires a firm to take reasonable care to ensure the suitability of its advice.
(2) This chapter also implements articles 12 and 13 of the Insurance Mediation Directive for non-investment insurance contracts (which means that, in respect of communications by telephone, it follows the approach in article 3 of the Distance Marketing Directive).
(3) This chapter also implements article 9 of the Distance Marketing Directive for non-investment insurance contracts concluded by distance means.

01/11/2007

ICOB 4.1.7

The purpose of this chapter is to ensure that:

(1) customers are adequately informed about the nature of the service that they have received from an insurance intermediary in relation to non-investment insurance contracts. In particular, insurance intermediaries need to make clear to customers the scope and type of the products and insurance undertakings on which their service is based;
(2) where a personal recommendation is made it is suitable for a customer's demands and needs. The nature of the steps an insurance intermediary will need to take to ensure that the customer receives a personal recommendation that is suitable will vary depending on the demands and needs of the customer, the type of non-investment insurance contract being offered, and the type of customer (retail customer or commercial customer);
(3) customers receive a statement of their demands and needs and the reasons for any personal recommendation made by an insurance intermediary;
(4) [deleted]
(5) if requested by a commercial customer, the insurance intermediary discloses its commission; and
(6) retail customers are not charged for non-investment insurance contracts concluded by distance means without their prior consent.

01/11/2007

ICOB 4.2

Status disclosure

14/01/2005

Retail and commercial customers: disclosure before or immediately after conclusion of the contract

ICOB 4.2.1

(1) ICOB 4.2.2 R to ICOB 4.2.14 R set out the status disclosure requirements that an insurance intermediary must meet to comply with the Insurance Mediation Directive.
(2) The rules in ICOB 4.2 state the timing by which status disclosure information must be given to the customer, in accordance with the Insurance Mediation Directive and the Distance Marketing Directive. The insurance intermediary may provide information to the customer earlier than the time specified in the rules. For example, an insurance intermediary who is also providing services in connection with packaged products or home finance transactions may wish to combine the information required by this section with the status disclosure requirements in the Conduct of Business and Mortgages and Home Finance: Conduct Business sourcebooks, and provide the information to the customer on initial contact, using the combined initial disclosure document.
(3) For certain types of general insurance contract, such as motor insurance, it is customary for a customer to contact various insurance intermediaries for quick quotes which he can then compare. In these circumstances, it is not necessary for the insurance intermediary to give the status disclosure information at the time that the quick quote is provided, if the quote cannot be accepted (and a contract cannot be formed) without the insurance intermediary obtaining further information from the customer.
(4) The rules in ICOB 4.2 do not specify the format in which information must be provided to the customer. An insurance intermediary may use the initial disclosure document, the combined initial disclosure document, a terms of business letter, or another document to provide information to the customer.

01/11/2007

ICOB 4.2.2

(1) An insurance intermediary must provide the information in ICOB 4.2.8 R to the customer in a durable medium at any time before conclusion of a non-investment insurance contract, unless an exemption in (2) or (3) applies.
(2) Exemption: oral disclosure The information in ICOB 4.2.8 R need not be provided in a durable medium before conclusion of the contract but may be provided orally before the conclusion of the contract if:

(a) the customer requests this; or
(b) the customer requires immediate cover.

(3) Exemption: telephone sales

(a) This exemption applies if the service is being provided on the telephone and the customer wishes to enter into a non-investment insurance contract.
(aa) The insurance intermediary must provide its name and (if it initiated the call) the commercial purpose of the call.
(b) Provided the customer gives his explicit consent to receiving only limited information, the insurance intermediary may proceed on the basis of at least the following information:

(i) the identity of the person in contact with the customer and his link with the insurance intermediary; and
(ii) that other information is available on request, and the nature of the information.

(c) If the customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the insurance intermediary must prior to the conclusion of the contract provide all of the information required by ICOB 4.2.8 R orally to the customer.

(4) Where (2) or (3) applies, the customer must be provided with the information in ICOB 4.2.8 R in a durable medium immediately after the conclusion of the contract.

06/03/2006

ICOB 4.2.3

(1) The insurance intermediary may, if it so chooses, make the customer aware that he is able to receive the information in ICOB 4.2.8 R orally, in accordance with ICOB 4.2.2 R(2), or (in the case of telephone communications) that the more limited information requirements of ICOB 4.2.2 R(3) may apply.
(2) If the customer requires immediate cover and the non-investment insurance contract is concluded over the telephone, the insurance intermediary may take advantage of either of the exemptions in ICOB 4.2.2 R(2) or ICOB 4.2.2 R(3), subject to the customer giving his explicit consent.

14/01/2005

Use of the initial disclosure document and combined initial disclosure document

ICOB 4.2.4

(1) The requirement in ICOB 4.2.2 R(1) can be met by use of the initial disclosure document set out in ICOB 4 Annex 1 G. Alternatively, in circumstances where the insurance intermediary has reasonable grounds to be satisfied that the services which it is likely to provide will, in addition to relating to non-investment insurance contracts, also relate to home finance transactions or packaged products, the insurance intermediary may use the combined initial disclosure document.
(2) Subject to ICOB 4.2.5 R, an insurance intermediary may use all or part of the wording and format of the initial disclosure document at ICOB 4 Annex 1 G (though if it chooses to omit any of the information required by ICOB 4.2.8 R, the insurance intermediary must still provide this information to the customer in a durable medium before the conclusion of the non-investment insurance contract in accordance with ICOB 4.2.2 R). This flexibility does not apply if an insurance intermediary uses the combined initial disclosure document (see ICOB 4.2.7 R), because the COB and MCOB rules require that the wording and the format of the document must not be changed.
(3) The combined initial disclosure document must be given in accordance with the rules in COB and MCOB. In particular (and in contrast with the initial disclosure document set out in ICOB 4 Annex 1 G), it will need to be provided on initial contact.

06/04/2007

ICOB 4.2.5

If an insurance intermediary chooses to use the initial disclosure document at ICOB 4 Annex 1 G, it must not include the key facts logo and the heading and text in Section 1 unless it uses the document in full and makes no changes to the text other than changes allowed by the notes to the document.

14/01/2005

ICOB 4.2.6

If an insurance intermediary uses the initial disclosure document and includes the key facts logo, the key facts logo:

(1) must be positioned as shown in ICOB 4 Annex 1 G;
(2) must be accompanied by the words 'about our insurance services' as shown in ICOB 4 Annex 1 G;
(3) may be a different size from that in ICOB 4 Annex 1 G, but it must be reasonably prominent and its proportions must not be distorted; and
(4) may be in colour, but this must not diminish its prominence.

14/01/2005

ICOB 4.2.7

If an insurance intermediary chooses to use the combined initial disclosure document, it must use the document in full and make no change to the text other than changes allowed by the notes to the document.

06/04/2007

ICOB 4.2.8

Information to be provided before conclusion of the contract or immediately after conclusion of the contract

This table belongs to ICOB 4.2.2 R

(1)

The name and address of the insurance intermediary.

(2)

The insurance intermediary's statutory status (in accordance with GEN 4 Annex 1 (Statutory status disclosure)).

(3)

That items 1 and 2 can be checked on the FSA's Register by visiting the FSA's website http://www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234.

(4)

Details of any holding, direct or indirect, that an insurance intermediary has that represents more than 10 per cent of the voting rights or of the capital in an insurance undertaking.

(5)

Details of any holding, direct or indirect, that an insurance undertaking or parent of an insurance undertaking has that represents more than 10 per cent of the voting rights or of the capital in the insurance intermediary

(6)

In relation to the non-investment insurance contract provided, whether the insurance intermediary has provided, or will provide, advice or information:

(a)

on the basis of a fair analysis of the market; or

(b)

from a limited number of insurance undertakings; or

(c)

from a single insurance undertaking.

If (b) or (c) applies, the insurance intermediary must also disclose whether it is contractually obliged to conduct insurance mediation activity in this way.

(7)

If the contract provided has not been selected on the basis of a fair analysis of the market, that the customer can request a copy of the list of the insurance undertakings the insurance intermediary selects from or deals with in relation to the contract provided.

(8)

How to complain to the insurance intermediary and that complaints may subsequently be referred to the Financial Ombudsman Service or any other applicable named complaints scheme.

(9)

The compensation arrangements should the insurance intermediary be unable to meet its liabilities.

Notes

(1)

If the customer is dealing with an appointed representative of an insurance intermediary, the insurance intermediary is responsible for ensuring that the appointed representative makes the appropriate disclosures (see ICOB 1.6). In that case, the insurance intermediary must ensure that:

(a)

for item 1, the appointed representative provides its own name and address;

(b)

for item 2, the appointed representative makes the disclosure required by GEN 4 Annex 1(4);

(c)

for item 4, the appointed representative discloses its own holding and not the holding of the insurance intermediary;

(d)

for item 5, the holding disclosed is the holding in the appointed representative and not in the insurance intermediary;

(e)

for item 6, the appointed representative discloses the basis on which it provides advice or information; and

(f)

for item 8, the details provided are details of how to complain to the appointed representative.

(2)

Under item 1, where the insurance intermediary trades under a different name from that under which it is authorised, it must disclose the name under which it is authorised and listed on the FSA Register. For an appointed representative, the same applies in relation to the name under which it is registered and listed on the FSA Register.

(3)

Under item 1, the address should be the head office address or, if more appropriate, the principal place of business from which the insurance intermediary or appointed representative expects to conduct business with the customer.

(4)

In addition to the disclosure required by item 9, the insurance intermediary must ensure that, where relevant, it describes the extent and level of compensation cover and how further information can be obtained, after the conclusion of the contract and in a durable medium. The insurance intermediary may provide this information before the contract is concluded, along with the information required by item 9, if it so chooses.

06/03/2006

Disclosure by insurance intermediaries when introducing

ICOB 4.2.9

Where contact by the insurance intermediary with the customer is limited to introducing the customer to another insurance intermediary (or to an insurer as product provider), the insurance intermediary making the introduction must give the customer the following information about itself in good time before making the introduction:

(1) the information in ICOB 4.2.8 R (1) and (2);
(2) details of fees, if any, that the customer will be charged for the service being provided; and
(3) whether the insurance intermediary introducing the customer is a member of the same group as the firm to whom the introduction is to be made.

01/01/2006

ICOB 4.2.10

As article 33 of the Regulated Activities Order makes clear, the activity of introducing falls within article 25(2) of the Regulated Activities Order (Arranging deals in investments). ICOB 4.2.9 R applies in the limited circumstances where the arrangements made are confined to putting the customer in contact with another person. If the insurance intermediary goes further, for example by advising the customer on a particular contract of insurance which can be obtained from that person, ICOB 4.2.2 R applies.

14/01/2005

Fair analysis

ICOB 4.2.11

An insurance intermediary cannot hold itself out as giving information or advice to customers on non-investment insurance contracts on the basis of a fair analysis of the market in accordance with ICOB 4.2.8 R(6)(a) unless:

(1) it has considered a sufficiently large number of non-investment insurance contracts available in the relevant sector or sectors of the market; and
(2) the consideration in (1) is based on criteria which reflect adequate knowledge of non-investment insurance contracts in the relevant sector or sectors of the market.

14/01/2005

ICOB 4.2.12

(1) If an insurance intermediary holds itself out as giving information or advice to customers on certain types of non-investment insurance contracts on the basis of a fair analysis of the market (or any sector of that market), the selection of insurance undertakings the insurance intermediary considers for this purpose will need to be sufficiently large to enable the insurance intermediary to satisfy the requirement in ICOB 4.2.11 R. One way in which this requirement may be satisfied is by the insurance intermediary using 'panels' of insurance undertakings which are sufficient to enable the insurance intermediary to give advice or information on a fair analysis basis and which are reviewed on a regular basis. An insurance intermediary which provides a service based on a fair analysis of the market (or from a sector of the market) should ensure that its analysis of the market and the available non-investment insurance contracts is kept adequately up-to-date. For example, an insurance intermediary would need to update its selection of non-investment insurance contracts if it became aware that a non-investment insurance contract had generally become available offering an improved product feature, or a better premium, when compared with the non-investment insurance contracts currently in the insurance intermediary's selection. The frequency with which the selection of contracts needs to be updated will depend on the extent to which new contracts are made available on the market.
(2) Where a 'panel' of insurance undertakings is used, the criteria the insurance intermediary uses to select the panel will be important in determining whether the panel is sufficient for the insurance intermediary to provide a service based on a fair analysis of the market. The selection should be based on the product features, premiums and services offered by insurance undertakings to customers, and not solely on the benefit that the insurance undertakings offer to the insurance intermediary.

14/01/2005

ICOB 4.2.13

(1) An insurance intermediary may provide advice or information on a different basis to the same customer for different types of non-investment insurance contracts. For example, an insurance intermediary may give advice or information on the basis of a fair analysis of the market in respect of motor insurance contracts, but give advice or information only on a single insurance undertaking's contract for home contents insurance. The disclosure at ICOB 4.2.8 R(6) should be based on the service that the insurance intermediary is providing in relation to a particular non-investment insurance contract for that customer.
(2) INSPRU 1.5.13 R (Restriction of business to insurance) in practice restricts the business which an insurer can carry on.

31/12/2006

Information to be provided to customers on request

ICOB 4.2.14

(1) An insurance intermediary that provides a service under ICOB 4.2.8 R(6)(b) or (c) must maintain, and keep up-to-date, for each type of non-investment insurance contract it deals with, a list of insurance undertakings it selects from or deals with.
(2) An insurance intermediary must provide a copy of the list in (1) in a durable medium to a customer on request, in accordance with ICOB 4.2.8 R(7).

14/01/2005

Retail customers and commercial customers: information on fees

ICOB 4.2.15

An insurance intermediary must provide a customer with details of the amount of any fees (or where an actual fee cannot be given the basis for calculating any fees, enabling the customer to verify them) for an insurance mediation activity before the customer incurs liability to pay the fee, or before conclusion of the contract, whichever is earlier.

14/01/2005

ICOB 4.2.16

ICOB 4.2.15 R means that fees charged over the life of the contract by the insurance intermediary, including fees for mid-term adjustments, must be disclosed before the non-investment insurance contract is concluded.

14/01/2005

ICOB 4.2.17

The information in ICOB 4.2.15 R can be provided in any medium before the conclusion of the contract but must be provided in a durable medium immediately after the conclusion of the contract.

14/01/2005

ICOB 4.2.18

(1) The fees referred to in ICOB 4.2.15 R are fees for mediation services. Fees for non-investment insurance contracts are covered in ICOB 5.5.14 R(3).
(2) Fees do not include premiums, or commissions that are part of premiums.

14/01/2005

Overseas business for UK retail customers

ICOB 4.2.19

(1) Unless (3) applies, an insurance intermediary must not conduct insurance mediation activities in respect of non-investment insurance contracts:

(a) from an office of its own (or of any appointed representative) outside the United Kingdom;
(b) with or for a retail customer who is in the United Kingdom;

unless it has, where relevant, made a disclosure in accordance with (2) to the retail customer.
(2) The required disclosure in (1) means a written statement making it clear that in some or all respects the regulatory system applying, including any complaints handling or compensation arrangements, will be different from that of the United Kingdom. The statement may also indicate the protections or compensation available under another system of regulation.
(3) (1) does not apply to an insurance intermediary when acting as a third party processor.

01/06/2005

Application for renewals and amendments where information has already been provided

ICOB 4.2.20

(1) ICOB 4.2 does not apply in relation to any insurance mediation activity that an insurance intermediary carries on with a customer in the course of renewing or amending a contract of insurance, if the information required by ICOB 4.2 has already been given to the customer in relation to the initial contract and is still accurate and up-to-date.
(2) If the information in relation to the initial contract that the insurance intermediary has previously disclosed to the customer in accordance with ICOB 4.2 has changed, the insurance intermediary must give the customer the updated information in accordance with the provisions of ICOB 4.2, but does not need to provide the other information required by ICOB 4.2.

14/01/2005

ICOB 4.2.21

An insurance intermediary will normally need to provide updated information within ICOB 4.2.20 R(2) to the customer in a durable medium before the conclusion of the contract, unless an exemption in ICOB 4.2.2 R(2) (oral disclosure) or ICOB 4.2.2 R(3) (telephone sales) applies.

14/01/2005

ICOB 4.3

Suitability

14/01/2005

Requirement for suitability

ICOB 4.3.1

(1) An insurance intermediary must take reasonable steps to ensure that, if in the course of insurance mediation activities it makes any personal recommendation to a customer to buy or sell a non-investment insurance contract, the personal recommendation is suitable for the customer's demands and needs at the time the personal recommendation is made.
(2) The personal recommendation in (1) must be based on the scope of the service disclosed in accordance with ICOB 4.2.8 R(6).
(3) An insurance intermediary may make a personal recommendation of a non-investment insurance contract that does not meet all of the customer's demands and needs, provided that:

(a) there is no non-investment insurance contract within the insurance intermediary's scope, as determined by ICOB 4.2.8 R(6), that meets all of the customer's demands and needs; and
(b) the insurance intermediary identifies to the customer, at the point at which the personal recommendation is made, the demands and needs that are not met by the contract that it personally recommends.

14/01/2005

Information about the customer's demands and needs

ICOB 4.3.2

In assessing the customer's demands and needs, the insurance intermediary must:

(1) seek such information about the customer's circumstances and objectives as might reasonably be expected to be relevant in enabling the insurance intermediary to identify the customer's requirements. This must include any facts that would affect the type of insurance recommended, such as any relevant existing insurance;
(2) have regard to any relevant details about the customer that are readily available and accessible to the insurance intermediary, for example, in respect of other contracts of insurance on which the insurance intermediary has provided advice or information; and
(3) explain to the customer his duty to disclose all circumstances material to the insurance and the consequences of any failure to make such a disclosure, both before the non-investment insurance contract commences and throughout the duration of the contract; and take account of the information that the customer discloses.

14/01/2005

ICOB 4.3.3

In relation to ICOB 4.3.2 R(3), an insurance intermediary should make clear to the customer what the customer needs to disclose. For example, in relation to private medical insurance, this could include any existing medical condition where relevant, or in relation to motor insurance, any modifications carried out to the vehicle.

14/01/2005

ICOB 4.3.4

An insurance intermediary should base his personal recommendation on what the customer tells him. Provided it complies with the rules in this section, the insurance intermediary is not required to take into account the customer's existing insurance cover (or, in the case of a personal recommendation relating to a pension term assurance policy, existing pension arrangements), or details of that cover (or those arrangements), if the customer is not able to provide this information.

06/04/2006

ICOB 4.3.5

If the insurance intermediary is aware that the customer's existing insurance cover is likely to significantly affect the suitability of any personal recommendation that the insurance intermediary might make, the insurance intermediary must either:

(1) not make a personal recommendation until details of the insurance cover are made available to him; or
(2) if it makes a personal recommendation, make clear to the customer that this may not be suitable because the insurance intermediary has not taken into account full details of the customer's existing insurance cover.

14/01/2005

Assessing the suitability of a contract against the customer's demands and needs

ICOB 4.3.6

In assessing whether a non-investment insurance contract is suitable to meet a customer's demands and needs, an insurance intermediary must take into account at least the following matters:

(1) whether the level of cover is sufficient for the risks that the customer wishes to insure;
(2) the cost of the contract, where this is relevant to the customer's demands and needs; and
(3) the relevance of any exclusions, excesses, limitations or conditions in the contract.

14/01/2005

ICOB 4.3.7

(1) Where ICOB 4.3.6 R(2) applies, an insurance intermediary should take into account the cost of the contract when compared to other non-investment insurance contracts that cover a similar range of demands and needs on which the insurance intermediary can provide advice or information.
(2) In meeting the requirements of ICOB 4.3.6 R, an insurance intermediary need not consider the following:

(a) alternatives to non-investment insurance contracts; and
(b) the needs of the customer that are not relevant to the type of contract in which the customer is interested.

14/01/2005

Pension term assurance policies

ICOB 4.3.8

Unless the insurance intermediary has sufficient information to conclude whether or not the customer's existing pension arrangements are likely to significantly affect the suitability of any personal recommendation of a pension term assurance policy that it might make, it must either:

(1) not make a personal recommendation until details of the pension arrangements are made available to it; or
(2) make clear to the customer that the personal recommendation may not be suitable because it has not taken into account full details of the customer's existing pension arrangements.

06/04/2006

ICOB 4.4

Statement of demands and needs

14/01/2005

ICOB 4.4.1

(1) Unless ICOB 4.4.2 R applies, where an insurance intermediary arranges for a customer to enter into a non-investment insurance contract (including at renewal), it must, before the conclusion of that contract, provide the customer with a statement that:

(a) sets out the customer's demands and needs;
(b) confirms whether or not the insurance intermediary has personally recommended that contract; and
(c) where a personal recommendation has been made, explains the reasons for personally recommending that contract.

(2) The statement in (1) must reflect the complexity of the contract of insurance proposed.
(3) Unless (4) applies, the statement in (1) must be provided in a durable medium.
(4) An insurance intermediary may provide the statement in (1) orally if:

(a) the customer requests it; or
(b) the customer requires immediate cover;

but in both cases the insurance intermediary must provide the information in (1) immediately after the conclusion of the contract, in a durable medium.

14/01/2005

Exemptions

ICOB 4.4.2

(1) Commercial customers

(a) ICOB 4.4.1 R(1) does not apply to an insurance intermediary that is an insurer when dealing with a commercial customer, unless the insurer makes a personal recommendation to that commercial customer.
(b) If an insurance intermediary that is an insurer makes a personal recommendation to a commercial customer, it need not provide the commercial customer with a statement of demands and needs, provided that:

(i) it has obtained the consent of the commercial customer not to receive the statement of demands and needs; and
(ii) it has explained to the commercial customer the consequences of giving that consent before it is given.

(1A) Non-advised sales by insurers to retail customers

(a) ICOB 4.4.1R (1) does not apply to an insurance intermediary that is an insurer when dealing with a retail customer, unless the insurer makes a personal recommendation to that retail customer.
(b) Where ICOB 4.4.1R (1) does not apply under (a), the insurer must provide the retail customer with a statement that confirms the insurer has not personally recommended that contract.
(c) Unless (d) or (e) applies, the statement in (b) must be provided in a durable medium before the conclusion of the contract (including at renewal).
(d) If the customer requests the statement in (b) orally or requires immediate cover, the insurer may provide the statement orally provided that it does so before the conclusion of the contract and provides the statement in a durable medium immediately after the conclusion of the contract.
(e) Where a contract is concluded by telephone, the statement in (b) must be provided immediately after the conclusion of the contract in a durable medium.

(2) Telephone sales Where a contract is concluded by telephone with a customer, the statement of demands and needs:

(a) must be provided immediately after the conclusion of the contract in a durable medium;
(b) may also be provided orally before the contract is concluded.

(3) Notwithstanding (1) and (1A), an insurer must ensure that its appointed representative complies with the requirements of this section (unless acting as the insurer's third party processor).

06/03/2006

ICOB 4.4.3

(1) An insurance intermediary may provide the demands and needs statement as part of another document, such as an application form.
(2) For quick quotes (see ICOB 4.2.1 G(3)), there is no requirement for the insurance intermediary to provide a demands and needs statement, but one must be provided before contract conclusion.
(3) A statement of demands and needs is, by definition, relevant to (and generated by) the specific circumstances of the customer. However, the degree of knowledge of the customer's circumstances that is required will vary from case to case.

14/01/2005

Demands and needs statement for non-advised sales

ICOB 4.4.4

ICOB 4.4.3 G gives an insurance intermediary flexibility as to the format of the demands and needs statement. Some examples of approaches that may be appropriate where the insurance intermediary has not made a personal recommendation include:

(1) providing a demands and needs statement as part of an application form, so that the demands and needs statement is made dependent upon the customer providing personal information on the application form. For instance, the application form might include a statement along the lines of: 'If you answer 'yes' to questions a, b and c your demands and needs are those of a pet owner who wishes and needs to ensure that the veterinary needs of your pet are met now and in the future';
(2) producing a demands and needs statement in product documentation that will be appropriate for anyone wishing to buy the product. For example, 'This product meets the demands and needs of those who wish to ensure that the veterinary needs of their pet are met now and in the future'; and
(3) giving a customer a record of all his demands and needs that have been discussed.

14/01/2005

ICOB 4.4.4A

Where a firm has not made a personal recommendation and provides a key features document as an alternative to a policy summary under ICOB 5.5.4 R, that constitutes provision of a statement of demands and needs.

01/11/2007

Demands and needs statement when a personal recommendation is made

ICOB 4.4.5

(1) Where a personal recommendation has been made the demands and needs statement will need to record the reasons for the personal recommendation as well as the customer's demands and needs.
(2) In accordance with ICOB 4.4.7 R, the demands and needs statement is the record that the insurance intermediary must maintain to demonstrate that he has given a suitable personal recommendation. Accordingly, the statement will need to contain sufficient information to act as this record.
(3) ICOB 4.4.6 G contains guidance on the content of the statement of demands and needs required by ICOB 4.4.1 R(1).

14/01/2005

ICOB 4.4.6

Guidance on the content of the statement of demands and needs required by ICOB 4.4.1 R(1)

This table belongs to ICOB 4.4.5 G(3).

Introduction

(1)

Where relevant, the statement should explain simply and clearly why the personal recommendation is viewed as suitable, having regard to the customer's demands and needs.

Style and Presentation

(2)

The style and presentation of the statement is left for the insurance intermediary to decide, so that he can design a statement which works best for the market in which he transacts business. A statement is more likely to be effective if it demonstrates these features:

(a)

simplicity and plain English: when technical terms need to be incorporated, they should be explained, if the customer is unlikely to understand their meaning; and

(b)

concise and clear messages: lengthy explanations and extensive statements are likely to reduce the effectiveness of the statement, and make the customer less likely to read the statement properly.

(3)

An insurance intermediary should take the following into account when constructing a statement following a personal recommendation:

(a)

the statement should explain why the customer's demands and needs combine to make the recommended contract suitable for the customer. It should not merely state what contract is being recommended with no link to the customer's demands and needs; and

(b)

an insurance intermediary that offers contracts from more than one insurance undertaking should include a statement of why a particular insurance undertaking has been recommended; reasons may include contract features not available anywhere else, price, or service levels.

14/01/2005

Record keeping where a personal recommendation is made

ICOB 4.4.7

(1) An insurance intermediary that makes a personal recommendation to a customer must, if the customer acts on the personal recommendation by concluding the non-investment insurance contract with that insurance intermediary:

(a) unless ICOB 4.4.2 R(1)(b) applies, retain a copy of the statement required by ICOB 4.4.1 R(1); or
(b) if ICOB 4.4.2 R(1)(b) applies, make and retain, in a durable medium, a record of the reasons for the personal recommendation.

(2) Both the copy of the statement in (1)(a) and the record in (1)(b) must be retained for a minimum period of three years from the date on which the personal recommendation was made.

14/01/2005

ICOB 4.4.8

The effect of ICOB 4.4.7 R(1) is that if the customer does not act on the personal recommendation, the insurance intermediary need not retain a copy of the statement.

14/01/2005

ICOB 4.5

[deleted material moved to ICOB 2.10]

06/03/2006

ICOB 4.6

Commission disclosure for commercial customers

14/01/2005

ICOB 4.6.1

Before the conclusion of a non-investment insurance contract, or at any other time, an insurance intermediary that conducts insurance mediation activities for a commercial customer must, if that commercial customer asks, promptly disclose the commission that he and any associate of his receives in connection with the non-investment insurance contract in question, in cash terms or, to the extent it cannot be indicated in cash terms, the basis for the calculation of the commission, in a durable medium.

14/01/2005

ICOB 4.6.2

ICOB 4.6.1 R does not replace the general law on the fiduciary obligations of an agent. In relation to contracts of insurance the essence of these obligations is generally a duty on the agent to account to his principal. However, in certain circumstances, the duty is one only of disclosure. Where a customer employs an insurance intermediary by way of business and does not remunerate him, and where it is usual for the insurance intermediary to be remunerated by way of commission paid by the insurer out of premium payable by the customer, then if the customer asks what the insurance intermediary's remuneration is, the insurance intermediary must tell him. ICOB 4.6.1 R is additional to this requirement in that it applies whether or not the insurance intermediary is an agent of the commercial customer.

14/01/2005

ICOB 4.6.3

ICOB 4.1.4 R(3) states that ICOB 4.6 does not apply to an insurance intermediary that is an insurer. This means that there is no obligation on an insurer to disclose a commission equivalent to a commercial customer on request.

14/01/2005

ICOB 4.6.4

The disclosures required by ICOB 4.6.1 R should be made in a manner that is clear, fair and not misleading, as required by ICOB 2.2.3 R (Clear, fair and not misleading communication).

14/01/2005

ICOB 4.6.5

If the precise value of commission is not known in advance, the insurance intermediary should estimate the rate likely to apply in relation to the contract of insurance in question.

14/01/2005

ICOB 4.6.6

ICOB 4.6.1 R does not require the disclosure of commission throughout the distribution chain between the insurer and commercial customer; but it does require disclosure of commission paid to any associate, regardless of whether the associate is part of the distribution chain.

14/01/2005

ICOB 4.6.7

In considering any disclosure of commission under ICOB 4.6.1 R, an insurance intermediary should include all forms of remuneration from any arrangements he may have for remuneration in connection with the non-investment insurance contract (including arrangements for sharing profits, for payments relating to the volume of sales, and for payments from premium finance companies in connection with arranging finance for a non-investment insurance contract).

14/01/2005

ICOB 4.6.8

An example of a situation where the commission could not be stated in cash terms under ICOB 4.6.1 R is where the insurance intermediary is remunerated under a profit share arrangement or any other similar arrangement under which the insurance intermediary may receive a non-fixed amount not specific to any particular non-investment insurance contract. The commission, to the extent it cannot be indicated in cash terms, should instead be indicated by showing the basis of its calculation.

14/01/2005

ICOB 4.7

Unsolicited services

14/01/2005

ICOB 4.7.1

(1) Subject to ICOB 4.7.2 R, an insurance intermediary or an insurer must not:

(a) supply a service to a retail customer without a prior request on his part, when the supply of such service includes a request for immediate or deferred payment; or
(b) enforce any obligation against a retail customer in the event of unsolicited supplies of such services, the absence of a reply not constituting consent.

(2) Paragraph (1) applies in relation to insurance mediation activities and insurance business, in relation to non-investment insurance contracts under an organised distance sales or service provision scheme run by the firm or by an intermediary, who, for the purpose of that supply, makes exclusive use of one or more means of distance communication up to and including the time at which the services are supplied.

01/11/2007

ICOB 4.7.2

ICOB 4.7.1 R does not apply for a tacit renewal of a distance contract.

14/01/2005

ICOB 4.7.3

The prohibition in ICOB 4.7.1 R includes the continuation of insurance after a specified period where the insurance has been free of charge to the retail customer during that period unless the retail customer has agreed before the period expires to pay for the insurance once the period has expired.

14/01/2005

ICOB 4.8

Language of the information provided to customers

14/01/2005

ICOB 4.8.1

(1) Except as provided in (2), the information provided to customers in accordance with this chapter by a firm must:

(a) (if the customer is in the United Kingdom) be in English; or
(b) (if the customer is in another EEA State) be in an official language of that EEA State.

(2) If a customer requests all the information provided to him in accordance with this chapter to be, and the firm agrees to it being, in another language then the information may be in that language.

14/01/2005

ICOB 4 Annex 1

Initial disclosure document

01/11/2007

This Annex belongs to ICOB 4.2.4 G (1).
This annex consists only of one or more forms or templates. Forms and templates are to be found through the 'Forms' link under Useful Links section at www.fsahandbook.info or on the Handbook CD-ROM.

01/11/2007

ICOB 4 Annex 2

Combined initial disclosure document [deleted - see COBS 6 Annex 2 G]

01/11/2007

ICOB 5

Product
disclosure

ICOB 5.1

Application and purpose

14/01/2005

Application who and what?

ICOB 5.1.1

This chapter applies to:

(1) an insurer;
(2) an insurance intermediary other than when introducing;
(3) a managing agent.

14/01/2005

ICOB 5.1.2

Throughout this chapter references to an insurer apply equally to a managing agent.

14/01/2005

ICOB 5.1.3

The definition of insurance intermediary includes an insurer when the insurer is carrying on insurance mediation activities, for example when, through its sales force, it advises on or arranges its own non-investment insurance contracts or those of another insurer.

14/01/2005

ICOB 5.1.4

This chapter applies to the sale, renewal and certain changes to a non-investment insurance contract with a retail customer or a commercial customer.

14/01/2005

ICOB 5.1.5

ICOB 5.1.6 G shows the provisions in this chapter which apply when a firm deals with a retail customer and those which apply when a firm deals with a commercial customer.

14/01/2005

ICOB 5.1.6

Application of ICOB 5 by customer type. This table belongs to ICOB 5.1.5 G.

Retail Customer

Commercial Customer

The whole chapter except ICOB 5.4

The whole chapter except ICOB 5.3

14/01/2005

ICOB 5.1.7

ICOB 5.5.18 R to ICOB 5.5.19 R (relating to directive-required information) qualify the general provisions on territorial scope set out in ICOB 1.3.

14/01/2005

ICOB 5.1.8

If information required by this chapter to be provided to a customer duplicates information required in ICOB 4 (Advising and selling standards), that information does not need to be provided twice unless required by a specific rule. However, the policy summary must always contain the information set out in ICOB 5.5.5 R except as specified in ICOB 5.4.8 R(1) and ICOB 5.5.1 R.

14/01/2005

Purpose

ICOB 5.1.9

(1) This chapter reinforces Principle 7 (Communications with clients), which requires a firm to pay due regard to the needs of its clients and communicate information to them in a way that is clear, fair and not misleading.
(2) The purpose of this chapter is to ensure that customers have the necessary information to make an informed choice about whether or not to buy a specific non-investment insurance contract and whether a contract continues to meet their needs.

14/01/2005

ICOB 5.1.10

This chapter also implements relevant requirements of the Distance Marketing Directive, the Consolidated Life Directive and Third Non-Life Directive.

14/01/2005

ICOB 5.2

Information - responsibilities of insurers and intermediaries

14/01/2005

ICOB 5.2.1

This section covers the responsibility for content, production and provision to the customer of information. It provides first for the typical situation in which both insurer and insurance intermediary are UK-based, and also provides for cross-border situations and those in which insurance undertakings or intermediaries are not firms or where the sale involves a connected contract.

14/01/2005

If both the insurer and the insurance intermediary are UK-based

ICOB 5.2.2

If an insurer and an insurance intermediary (other than an authorised professional firm carrying on non-mainstream regulated activities or a firm selling connected contracts) each operates from an establishment maintained by it in the United Kingdom, the insurer is responsible for the content and production of the information referred to at ICOB 5.2.9 R and the insurance intermediary is responsible for providing that information to the customer.

14/01/2005

If either the insurance undertaking or the insurance intermediary is not UK-based, not authorised, an authorised professional firm or a firm selling connected contracts

ICOB 5.2.3

(1) If an insurance intermediary operates from an establishment maintained by it in the United Kingdom, but an insurance undertaking does not, the insurance intermediary is responsible for the content and production of the information in ICOB 5.2.9 R as well as for providing it to the customer.
(2) Unless (3) applies, if an insurer operates from an establishment maintained by it in the United Kingdom but the intermediary does not, is not authorised, is a firm selling connected contracts, or is an authorised professional firm carrying on non-mainstream regulated activities, the insurer is responsible for the provision of the information in ICOB 5.2.9 R to the customer, where the non-investment insurance contract relates to a customer habitually resident in the EEA, subject to ICOB 5.2.5 R, as well as for the content and production of it.
(3) If an insurer operates from an establishment maintained by it in the United Kingdom, but the intermediary does not, and the customer is habitually resident outside the EEA, ICOB 5 does not apply to the insurer.

14/01/2005

ICOB 5.2.4

(1) ICOB 5.2.3 R(2) makes the insurer responsible for the content, production and provision of information to customers dealing through:

(a) intermediaries in the United Kingdom who do not have Part IV permission (for example, travel agents selling connected contracts, exempt professional firms and intermediaries who do not have an establishment in the United Kingdom); or
(b) firms selling connected contracts; or
(c) authorised professional firms carrying on non-mainstream regulated activities.

(2) The insurer is not responsible for the content, production or provision of information to customers outside the EEA unless the insurer is acting as the insurance intermediary in contact with the customer.

14/01/2005

Exceptions where insurers deal with certain other intermediaries

ICOB 5.2.5

If an insurer deals with an intermediary who operates from an establishment in the United Kingdom but does not need to be authorised, who is a firm selling connected contracts, or who is an authorised professional firm carrying on non-mainstream regulated activities, despite ICOB 5.2.3 R(2) the insurer need not produce or provide:

(1) a policy summary; and
(2) in respect of a distance sale, the directive-required information at ICOB 5.5.20 R(16) to (21).

14/01/2005

ICOB 5.2.6

If ICOB 5.2.3 R requires an insurer to provide information to the customer, the rules at ICOB 5.3 and ICOB 5.4, where they refer to an insurance intermediary, must be read as applying to an insurer.

14/01/2005

Insurers not operating from establishments in the United Kingdom

ICOB 5.2.7

Where an insurer is not operating from an establishment maintained by it in the United Kingdom, and there is no insurance intermediary which operates from an establishment maintained by it in the United Kingdom, the insurer need produce and provide only the directive-required information at ICOB 5.5.20 R(1) to (15) when ICOB 1.3.4 R or ICOB 1.3.5 R applies.

14/01/2005

ICOB 5.2.8

If an insurer does not operate from an establishment in the United Kingdom and deals with an insurance intermediary which does not have an establishment in the United Kingdom, and ICOB 1.3.4 R or ICOB 1.3.5 R applies, the insurer is responsible for the content and must produce and provide the information required by those rules.

14/01/2005

Information to be provided to customers

ICOB 5.2.9

The information which is required is:

(1) a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);
(2) directive-required information (ICOB 5.5.16 R to ICOB 5.5.26 G);
(3) a policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);
(4) information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);
(5) information, where relevant, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G); and
(6) for any applicable compensation scheme mentioned in the policy summary in accordance with ICOB 5.5.1 R, the extent and level of cover and how further information can be obtained, if not already included in the policy summary in accordance with ICOB 5.5.1 R(2)(b).

14/01/2005

ICOB 5.2.10

The directive-required information referred to in ICOB 5.2.9 R(2) does not need to be in a separate document. It may be incorporated into another document such as the policy document or included in a document of which the policy summary is a part.

14/01/2005

ICOB 5.2.10A

Where any rule in this chapter refers to information about fees to be provided to customers, the fees so mentioned are all fees throughout the distribution chain between the insurer and the customer and which are payable by the customer in addition to the premium.

14/01/2005

ICOB 5.2.11

If an insurer agrees with an insurance intermediary that it will take on any part of the insurance intermediary's responsibilities required by this chapter, then the relevant rule will apply to the insurer as if it were the insurance intermediary.

14/01/2005

ICOB 5.2.11A

An insurer may agree with an insurance intermediary that the insurance intermediary will be responsible for producing and providing to the retail customer the price and payment information referred to in ICOB 5.5.20 R (17) (b) to (f).

14/01/2005

ICOB 5.2.12

If an insurance intermediary is required by this chapter to provide information to a customer in relation to a non-investment insurance contract, the insurer must produce that information in good time to enable the insurance intermediary to comply with the rules in this chapter, or must produce it promptly in response to a request by the insurance intermediary.

14/01/2005

Provision of information to customers "in good time"

ICOB 5.2.13

Some of the rules in this chapter require information to be provided to retail customers "in good time" before the conclusion of a contract and to commercial customers "in good time" before expiry of an existing contract. In determining what is "in good time" an insurance intermediary should consider the importance of the information to the customer in helping him to decide whether a contract meets his needs and the point in the sales process or renewal process at which the information may be most useful.

14/01/2005

ICOB 5.2.14

If the rules in this chapter require a policy document to be given to a customer before conclusion of the contract, this must be the policy document and not a specimen. If an insurance intermediary provides a copy of the policy terms to a customer for information before conclusion of the contract, in circumstances where the rules in this chapter do not require it, a specimen of the terms can be given to the customer.

14/01/2005

ICOB 5.3

Provision of information to retail customers

14/01/2005

Before the conclusion of a contract which is not a distance contract

ICOB 5.3.1

If a non-investment insurance contract is not a distance contract, an insurance intermediary must, in good time before the conclusion of the contract:

(1) provide a retail customer with the following information in a durable medium:

(a) a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);
(b) a statement of price (ICOB 5.5.14 R to ICOB 5.5.15 G);
(c) the relevant directive-required information set out in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R); and

(2) draw the attention of the retail customer orally to the importance of reading the policy summary, and in particular the section of the policy summary on significant or unusual exclusions or limitations.

06/07/2006

On conclusion of a contract which is not a distance contract

ICOB 5.3.2

Where the retail customer does not have the opportunity to read the information provided in accordance with ICOB 5.3.1 R(1) before conclusion of the contract, for example, because it is provided in a sealed pack, the insurance intermediary should provide a specimen copy of all the information in such a way that the retail customer is able to read it before conclusion of the contract. For example, a stand with sealed packs could be accompanied by a copy of the policy summary and other required information, with a notice that they contain important information the retail customer should read before buying the policy. Oral disclosure at the point of sale must still be given in accordance with ICOB 5.3.1 R(2).

14/01/2005

ICOB 5.3.3

Guidance on what constitutes a significant or unusual exclusion or limitation is set out in ICOB 5.5.8 G to ICOB 5.5.10 G.

14/01/2005

ICOB 5.3.4

When a non-investment insurance contract which is not a distance contract is concluded, an insurance intermediary must provide a retail customer in a durable medium, immediately after conclusion of the contract, with:

(1) a policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);
(2) information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);
(3) information, where relevant, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G);
(4) for any applicable compensation scheme mentioned in the policy summary in accordance with ICOB 5.5.1 R, the extent and level of cover and how further information can be obtained, if not already included in the policy summary in accordance with ICOB 5.5.1 R(2)(b).

14/01/2005

ICOB 5.3.5

ICOB 5.3.4 R does not prevent an insurance intermediary providing the information in ICOB 5.3.4 R (1) to (4) before the conclusion of the non-investment insurance contract.

14/01/2005

Before the conclusion of a distance contract

ICOB 5.3.6

(1) If a non-investment insurance contract is a distance contract, an insurance intermediary must provide a retail customer, in good time before the conclusion of the contract, with the following information in a durable medium, unless an exemption in (2) applies:

(a) a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);
(b) a statement of price (ICOB 5.5.14 R to ICOB 5.5.15 G);
(c) the relevant directive-required information set out in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R);
(d) the policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);
(e) information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);
(f) information, where applicable, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G); and
(g) information, where applicable, about the extent and level of compensation cover and how further information can be obtained about compensation arrangements, if not already included in (a).

(2) The following exemptions from (1) apply:

(a) Telephone sales
If a non-investment insurance contract is concluded by telephone, provided the retail customer gives his explicit consent to receiving only limited information, an insurance intermediary may proceed on the basis of at least the following information:

(i) name of the insurance undertaking;
(ii) type of insurance and cover;
(iii) significant features and benefits;
(iv) significant or unusual exclusions or limitations;
(v) the total price to be paid by the retail customer for the non-investment insurance contract (or, if an exact price cannot be indicated, the basis for calculation of the price enabling the retail customer to verify it);
(vi) notice of the possibility that other taxes or costs may exist in respect of the non-investment insurance contract that are not payable via the insurance intermediary or imposed by him;
(vii) the existence or absence of the right of cancellation and, where applicable, the duration of the cancellation period and the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay;
(viii) a telephone number or address to which a claim may be notified; and
(ix) that other information is available on request and the nature of that information.

If the retail customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the insurance intermediary must prior to the conclusion of the contract provide all of the information required by (1) orally to the retail customer.
(b) Certain other means of distance communication
If the non-investment insurance contract is concluded at the retail customer's request using a means of distance communication (other than by telephone) which does not enable provision of the information referred to in ICOB 5.3.6 R(1) in a durable medium before the conclusion of the contract, the insurance intermediary must provide the following information by other means before the conclusion of the contract:

(i) name of the insurance undertaking;
(ii) type of insurance and cover;
(iii) significant features and benefits;
(iv) significant or unusual exclusions or limitations;
(v) the total price to be paid by the retail customer for the non-investment insurance contract (or, if an exact price cannot be indicated, the basis for calculation of the price enabling the retail customer to verify it);
(vi) notice of the possibility that other taxes or costs may exist in respect of the non-investment insurance contract that are not payable via the insurance intermediary or imposed by him;
(vii) the existence or absence of the right of cancellation and, where applicable, the duration of the cancellation period and the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay; and
(viii) a telephone number or address to which a claim may be notified.

01/11/2007

On conclusion of a contract which is a distance contract

ICOB 5.3.8

When a non-investment insurance contract which is a distance contract is concluded in accordance with ICOB 5.3.6 R(2)(a) or (b), an insurance intermediary must provide a retail customer with the information in ICOB 5.3.6 R(1) in a durable medium immediately after conclusion of the contract.

14/01/2005

Information about the claims handling process

ICOB 5.3.9

The information about the claims handling process that the insurance intermediary must provide to the retail customer in accordance with ICOB 5.3.4 R(2) and ICOB 5.3.6 R(1)(e) is:

(1) the address, telephone number or other point of initial contact for notifying a claim; and
(2) the information the retail customer must provide to the insurance undertaking when notifying a claim.

14/01/2005

ICOB 5.3.10

The information in ICOB 5.3.9 R(1) and (2) must be provided in the same document.

14/01/2005

ICOB 5.3.11

The information in ICOB 5.3.9 R may be incorporated into another document or provided as a stand-alone document.

14/01/2005

Information about cancellation

ICOB 5.3.12

The information about cancellation that the insurance intermediary must provide to the retail customer in accordance with ICOB 5.3.4 R(3) or ICOB 5.3.6 R(1)(f) is:

(1) the existence or absence of a right to cancel in accordance with ICOB 6.2.1 R; and
(2) where a right to cancel exists:

(a) the duration of the cancellation period, in accordance with ICOB 6.2.2 R;
(b) the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay;
(c) the consequences of not exercising the right to cancel; and
(d) how the right to cancel may be exercised, including the address to which the notification of cancellation should be sent.

14/01/2005

ICOB 5.3.13

The information in ICOB 5.3.12 R should be sufficiently clear, prominent and informative to enable the retail customer to understand the right to cancel.

14/01/2005

ICOB 5.3.14

Where the notice of the right to cancel forms part of another document, or is one of a number of documents provided to the retail customer at the same time, the insurance intermediary should ensure that the presence of the notice of the right to cancel is drawn to the retail customer's attention.

14/01/2005

Renewal

ICOB 5.3.15

If a non-investment insurance contract with a retail customer, with a duration of no more than one year, is due for renewal, ICOB 5.3.16 R to ICOB 5.3.23 G apply in place of ICOB 5.3.1 R to ICOB 5.3.8 R.

14/01/2005

ICOB 5.3.16

If a non-investment insurance contract is of no more than one month's duration and its terms provide for automatic renewal and for cancellation at the retail customer's option, ICOB 5.3.1 R to ICOB 5.3.8 R and ICOB 5.3.18 R to ICOB 5.3.23 G do not apply, except that ICOB 5.3.12 R to ICOB 5.3.14 G apply if cancellation rights exist under ICOB 6, but if any changes are made to the terms or conditions of the policy, ICOB 5.3.21 R applies.

14/01/2005

ICOB 5.3.17

An example of a non-investment insurance contract referred to at ICOB 5.3.16 R is a health cash plan with a monthly renewal cycle.

14/01/2005

ICOB 5.3.18

No less than 21 days before the expiry of the policy, an insurance intermediary must:

(1) if the insurance undertaking is willing to invite renewal of the policy, take reasonable steps to provide the retail customer with renewal terms in a durable medium in accordance with ICOB 5.3.21 R; or
(2) take reasonable steps to notify the retail customer if the insurance undertaking is not willing to invite renewal; or
(3) notify the retail customer that the insurance intermediary no longer deals with the insurance undertaking.

06/03/2006

ICOB 5.3.19

ICOB 5.3.18 R(2) includes circumstances where the insurance undertaking is not willing to invite renewal through the insurance intermediary in contact with the retail customer.

14/01/2005

ICOB 5.3.20

ICOB 5.3.15 R has the effect that a renewal of a non-investment insurance contract of more than one year's duration must be treated as a new sale, in order to comply with the Distance Marketing Directive. A renewal of a non-investment insurance contract which has been extended in accordance with ICOB 5.3.22 R(4), so that it is longer than one year, must also be treated as a new sale. For these contracts an insurance intermediary should provide information in accordance with the rules in ICOB 5.3.1 R to ICOB 5.3.8 R and not ICOB 5.3.15 R.

01/11/2007

ICOB 5.3.21

The information to be provided to the retail customer in accordance with ICOB 5.3.16 R or ICOB 5.3.18 R(1) is:

(1) a statement of any changes to the terms of the policy;
(2) an explanation of those changes, where necessary;
(3) any changes to the directive-required information in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R);
(4) the statement of price at ICOB 5.5.14 R;
(5) information about cancellation (ICOB 5.3.12 R to ICOB 5.3.14 G); and
(6) a prominent statement of the retail customer's right to request a new policy document.

14/01/2005

ICOB 5.3.22

ICOB 5.3.18 R and ICOB 5.3.21 R do not apply where:

(1) the insurance intermediary has reason to believe that the retail customer does not wish to renew the policy through it;
(2) the insurance intermediary has notified the retail customer that it does not wish to act for him on renewal;
(3) the retail customer has already been notified that the insurance undertaking will not invite renewal; or
(4) the retail customer requests an extension to the non-investment insurance contract for a period less than that of the original non-investment insurance contract.

14/01/2005

ICOB 5.3.23

(1) Examples of situations where the insurance intermediary would have reason to believe that the retail customer does not intend to renew are travel insurance for a single trip, mortgage payment protection insurance where the mortgage has been repaid, or creditor insurance tied to the term of a loan.
(2) An insurance intermediary who contacts a retail customer at least 21 days before expiry of the policy to check whether the retail customer wishes to renew, can rely on an oral statement by the retail customer that he does not wish to renew or on the retail customer's failure to respond to a request in a durable medium to contact the insurance intermediary by a specified date if he wishes to renew.

14/01/2005

Mid-term changes

ICOB 5.3.24

For the duration of a non-investment insurance contract an insurance intermediary must notify a retail customer of:

(1) changes to the premium, unless the change conforms to a previously disclosed formula;
(2) changes to any term or condition of the contract, together with an explanation of any implications of the change where necessary; and
(3) changes to the directive-required information in ICOB 5.5.20 R(22), for a non-investment insurance contract that is a pure protection contract (subject to ICOB 5.5.19 R).

14/01/2005

ICOB 5.3.25

(1) If an insurance undertaking changes the premium or any term or condition of a non-investment insurance contract the insurance intermediary must provide the retail customer with the information referred to in ICOB 5.3.24 R, in a durable medium, in good time before the change takes effect, unless (2) applies.
(2) If the change referred to in (1) is at the request of the retail customer, and it is impracticable to provide the information in ICOB 5.3.24 R in a durable medium before the change takes effect, the insurance intermediary must:

(a) explain the implications of the change to the retail customer before the change takes effect; and
(b) provide the retail customer with the information referred to in ICOB 5.3.24 R promptly after the change takes effect, in a durable medium.

14/01/2005

ICOB 5.3.26

ICOB 5.3.24 R(1) means that an insurance intermediary does not need to notify a retail customer of a change to a premium which has previously been disclosed to the retail customer, such as a periodic percentage increase, or if the premium for creditor insurance adjusts according to a previously disclosed formula, depending on the level of the debt. However, if, for example, the insurance undertaking alters the formula for calculating the changes to the premium, this would need to be notified to the retail customer by the insurance intermediary.

14/01/2005

ICOB 5.3.27

When explaining the implications of a change in accordance with ICOB 5.3.24 R (2) or ICOB 5.3.25 R(2)(a) to a retail customer, an insurance intermediary should explain any changes to the benefits and significant or unusual exclusions arising from the change.

06/07/2006

ICOB 5.3.28

Insurers and insurance intermediaries will need to consider whether mid-term changes are compatible with the original non-investment insurance contract, in particular whether that non-investment insurance contract included terms reserving the right to vary premiums, charges or contract terms and conditions. Insurers and insurance intermediaries also need to ensure that any contract terms which reserve the right to make variations are not themselves unfair under the Unfair Terms Regulations. The FSA may, as a qualifying body under the Unfair Terms Regulations, issue from time to time case summaries or guidance of potential relevance to such variation terms (see UNFCOG).

28/08/2007

Group policies sold to retail customers

ICOB 5.3.29

When an insurance intermediary sells a group policy to a retail customer the terms of which provide for persons, other than the retail customer who concludes the non-investment insurance contract, to become policyholders, the insurance intermediary must, promptly after the conclusion of the contract:

(1) provide a policy document and a policy summary containing the information in ICOB 5.5.5 R except ICOB 5.5.5 R (6) (cross-references to the policy document) to the retail customer;
(2) inform the retail customer that he should:

(a) provide the policy summary containing the information in (1) to each policyholder who is capable of being a retail customer; and
(b) inform each policyholder that a copy of the policy document is available on request; and

(3) if the policy replaces a previous group policy, inform the retail customer that he should inform each policyholder who is capable of being a retail customer of any changes to the information in the policy summary.

14/01/2005

ICOB 5.3.30

(1) The policyholder referred to in ICOB 5.3.29 R is a person who has rights under the policy to make a claim on the insurance undertaking of the policy (as distinct from a person who can only make a claim on, for example, his employer or on trustees in respect of the policy (see ICOB 1.2.15 R and ICOB 1.2.16 G). Such a policyholder will typically be capable of being a retail customer under ICOB.
(2) The policy summary information to be provided to policyholders in accordance with ICOB 5.3.29R (2) can be provided in any form, for example, on an employer's intranet, in a staff handbook or in a separate booklet, providing it is in writing.

06/03/2006

ICOB 5.4

Provision of information to commercial customers

14/01/2005

Before the conclusion of the contract

ICOB 5.4.1

Before the conclusion of a non-investment insurance contract, an insurance intermediary must provide a commercial customer with:

(1) sufficient information to enable the commercial customer to make an informed decision about the contract being proposed;
(2) the directive-required information in ICOB 5.5.20 R(1) to (3) or ICOB 5.5.20 R(4) to (15) in writing (subject to ICOB 5.5.17 G to ICOB 5.5.19 R), unless the contract is being concluded by telephone; and
(3) the premium and any fees relating to the non-investment insurance contract.

14/01/2005

ICOB 5.4.2

Where a non-investment insurance contract with a commercial customer is concluded by telephone, ICOB 5.4.1 R (2) does not apply. The insurance intermediary must comply with ICOB 5.4.1 R(1) and (3) before conclusion of the contract and provide the information in ICOB 5.4.1 R (2) immediately after conclusion of the contract in accordance with ICOB 5.4.4 R.

14/01/2005

ICOB 5.4.3

(1) The information in ICOB 5.4.1 R(1) that an insurance intermediary provides may vary according to the commercial customer's knowledge, experience and ability.
(2) In deciding what information is sufficient, the insurance intermediary should take account of the main benefits, exclusions, limitations and conditions of a policy.

14/01/2005

On conclusion of the contract

ICOB 5.4.4

If the information referred to in ICOB 5.4.1 R(2) and (3) was not provided in writing before the non-investment insurance contract was concluded, it must be provided in writing immediately afterwards.

14/01/2005

ICOB 5.4.5

An insurance intermediary must provide a commercial customer with a policy document promptly after the conclusion of the non-investment insurance contract.

14/01/2005

ICOB 5.4.6

(1) In considering how to comply with the requirement to be prompt in ICOB 5.4.5 R, the insurance intermediary should take account of the complexity of the contract and the needs and expectations of the commercial customer
(2) Where insurance cover commences before the full terms and conditions have been agreed, the policy document should be provided to the commercial customer promptly after the terms and conditions have been finalised.

14/01/2005

ICOB 5.4.7

As stated in ICOB 1.2.8 R, ICOB 5.4.5 R applies to contracts with commercial customers that are contracts of large risks where the risk is located within the European Economic Area as well as other non-investment insurance contracts.

14/01/2005

Group policies sold to commercial customers

ICOB 5.4.8

When an insurance intermediary sells a group policy to a commercial customer the terms of which provide for persons, other than the commercial customer who concludes the non-investment insurance contract, to become policyholders, the insurance intermediary must, promptly after the conclusion of the contract:

(1) provide a policy document and a policy summary containing the information in ICOB 5.5.5 R except ICOB 5.5.5 R(6) (cross-references to the policy document) to the commercial customer (but a policy summary need not be supplied if there is no policyholder who is capable of being a retail customer);
(2) inform the commercial customer that he should:
(a) where a policy summary is supplied, provide the policy summary containing the information in (1) to each policyholder who is capable of being a retail customer; and
(b) inform each policyholder that a copy of the policy document is available on request; and
(3) where a policy summary is provided, if the policy replaces a previous group policy, inform the commercial customer that he should inform each policyholder who is capable of being a retail customer of any changes to the information in the policy summary.

06/03/2006

ICOB 5.4.9

(1) The policyholder referred to in ICOB 5.4.8 R is a person who has rights under the policy to make a claim on the insurance undertaking of the policy (as distinct from a person who can only make a claim on, for example, his employer or on trustees in respect of the policy) (see ICOB 1.2.15 R and ICOB 1.2.16 G). Such a policyholder will typically be capable of being a retail customer under ICOB. Examples of types of group policies that may fall within the scope of ICOB 5.4.8 R are a group health policy for employees or a personal accident policy for an affinity group such as a sports club or trades union.
(2) The policy summary information to be provided to policyholders in accordance with ICOB 5.4.8 R(2) can be provided in any form, for example, on an employer's intranet, in a staff handbook or in a separate booklet, providing it is in writing.

06/03/2006

Renewal

ICOB 5.4.10

Where a commercial customer's non-investment insurance contract is due for renewal, ICOB 5.4.11 R to ICOB 5.4.14 R apply instead of ICOB 5.4.1 R to ICOB 5.4.7 G.

14/01/2005

ICOB 5.4.11

Unless the insurance intermediary has reason to believe that the commercial customer does not wish to renew the policy or the insurance intermediary has notified the commercial customer that it will not act for him on renewal, the insurance intermediary must, in good time before the expiry of the policy:

(1) provide renewal terms to the commercial customer; or
(2) notify the commercial customer that the insurance undertaking is not willing to invite renewal of the policy or that the insurance intermediary no longer deals with the insurance undertaking.

14/01/2005

ICOB 5.4.12

ICOB 5.4.11 R(2) includes circumstances where the insurance undertaking is not willing to invite renewal through the insurance intermediary in contact with the commercial customer.

14/01/2005

ICOB 5.4.13

A commercial customer may consent not to receive the information in ICOB 5.4.11 R if the insurance intermediary has explained to the commercial customer the consequences of giving that consent before it is given.

14/01/2005

ICOB 5.4.14

ICOB 5.4.11 R and ICOB 5.4.13 R do not apply to renewal of a non-investment insurance contract of no more than one month's duration whose terms provide for automatic renewal and for cancellation at the commercial customer's option. Instead, the commercial customer must be notified of changes to the terms and conditions of the contract, including the premium, before the changes take effect.

14/01/2005

Mid-term changes

ICOB 5.4.15

For the duration of a non-investment insurance contract that is a pure protection contract an insurance intermediary must notify a commercial customer of any changes to the information in ICOB 5.5.20 R(22) (subject to ICOB 5.5.19 R) and should take reasonable steps to do so in good time before the change takes effect.

14/01/2005

ICOB 5.5

Information form and content

14/01/2005

Policy summary

ICOB 5.5.1

A policy summary must contain only:

(1) the information specified in ICOB 5.5.5 R in relation to a non-investment insurance contract; and
(2) at the option of the insurer or insurance intermediary:

(a) all or part of the information in ICOB 5.5.14 R (Statement of price);
(b) for any applicable compensation scheme mentioned in ICOB 5.5.5 R(12), the extent and level of cover and how further information can be obtained; and
(c) the information on cancellation in ICOB 5.3.12 R.

14/01/2005

ICOB 5.5.2

A policy summary, if not set out in a separate document, must be:

(1) in a prominent place within the other document and clearly identifiable as key information that the retail customer should read; and
(2) separate from the other content of the document in which it is included.

14/01/2005

ICOB 5.5.3

(1) A policy summary is a generic document, but the information in ICOB 5.5.5 R can be personalised if the insurer or insurance intermediary wishes, with the details applicable to the insurance cover being provided for a particular retail customer.
(2) A policy summary should be produced as an informative document. It is not intended to communicate the full terms and conditions of a non-investment insurance contract to the retail customer. The content should properly describe the contract but should not overload the retail customer with detail.

14/01/2005

Key features as an alternative to a policy summary

ICOB 5.5.4

A firm may provide a key features document that meet the requirements of COBS 13 and 14 on the content of the key features , instead of a policy summary, except that a firm is not required to include the title "key features of the [name of product]". The key features must include the information required in ICOB 5.5.5 R(6), (10) and (13) (cross-references from significant or unusual exclusions or limitations to related sections of the policy document, a telephone number or address for notification of claims and the key facts logo), in addition to that required by COBS 13 and 14..

01/11/2007

ICOB 5.5.5

Policy summary content. This table belongs to ICOB 5.5.1 R.

Policy summary content

(1)

a statement that the policy summary does not contain the full terms and conditions of the non-investment insurance contract, which can be found in the policy document;

(2)

name of the insurance undertaking;

(3)

type of insurance and cover;

(4)

significant features and benefits;

(5)

significant or unusual exclusions or limitations;

(6)

cross-references from (5) to the related sections of the policy document;

(7)

the duration of the non-investment insurance contract;

(8)

(for policies of more than one year), a statement, where relevant, that the retail customer may need to review and update his cover periodically to ensure it remains adequate;

(9)

the existence or absence of the right of cancellation and, where applicable, the duration of the cancellation period;

(10)

a telephone number or address to which a claim may be notified;

(11)

how to complain to the insurance undertaking and that complaints may subsequently be referred to the Financial Ombudsman Service or any other applicable named complaints scheme;

(12)

that, should the insurance undertaking be unable to meet its liabilities, the retail customer may be entitled to compensation from the compensation scheme, or from any other applicable named compensation scheme, or that there is no compensation scheme; and

(13)

the key facts logo.

01/01/2006

ICOB 5.5.6

When producing the information in ICOB 5.5.5 R a firm should have regard to the nature and complexity of the non-investment insurance contract in deciding:

(1) how much detail the policy summary should contain; and
(2) what constitutes a significant or unusual exclusion or limitation.

14/01/2005

ICOB 5.5.7

The requirement in ICOB 5.5.5 R(3) (type of insurance and cover) can be met in the following ways:

(1) by describing the broad type of non-investment insurance contract, for example:

(a) for motor insurance, whether the cover is comprehensive or third party;
(b) for household insurance, whether accidental damage is included; and
(c) for a pure protection contract, whether the premium is guaranteed, reviewable or renewable; or

(2) if a policy summary provided to a retail customer in a durable medium describes different types of cover available, for example, both comprehensive and third party motor insurance, the retail customer should be informed which type of cover is being offered at the time he is given the policy summary.

14/01/2005

ICOB 5.5.8

A significant exclusion or limitation is one that would tend to affect the decision of retail customers generally to buy. In determining what exclusions or limitations are significant an insurer should, in particular, consider the exclusions or limitations that relate to the significant features and benefits in ICOB 5.5.5 R(4) and factors which may have an adverse effect on the benefit payable under the contract. Another type of significant limitation might be that the contract only operates through certain means of communication e.g. telephone or Internet.

06/04/2006

ICOB 5.5.9

An unusual exclusion or limitation is one that is not normally found in comparable contracts.

14/01/2005

ICOB 5.5.10

Some examples of significant or unusual exclusions or limitations are as follows:

(1) for non-investment insurance contracts that are pure protection contracts or medical insurance: deferred payment periods; exclusion of certain conditions or diseases; exclusion of pre-existing medical conditions, and moratorium periods;
(2) for general insurance contracts: "high risk" electrical items from a household policy; audio equipment from motor insurance; winter sports from travel insurance; and
(3) for all types of non-investment insurance contracts: limits on the amounts of cover; limits on the period for which benefits will be paid; restrictions on eligibility to claim such as age or employment status; excesses.

01/01/2006

ICOB 5.5.11

The key facts logo must be included in a prominent position at the top of the policy summary, as shown in ICOB 4 Annex 1 for the initial disclosure document, or in a prominent position at the top of the relevant section of the document if the policy summary information is included in another document. The logo may be a different size from that in ICOB 4 Annex 1.

06/11/2006

ICOB 5.5.12

The FSA has developed a common keyfacts logo to be used on significant pieces of information directed to customers. Further requirements regarding the use of the logo and the location of specimens are set out in GEN 5.1 and GEN 5 Annex 1 G.

06/11/2006

ICOB 5.5.13

A firm should produce a policy summary to a standard of quality and presentation consistent with that used for other documents in relation to the non-investment insurance contract, so that retail customers are not deterred by its appearance from reading it.

14/01/2005

Statement of price

ICOB 5.5.14

A statement of price must include the following information:

(1) the total amount of the premium for the non-investment insurance contract or, if the premium cannot be indicated, the basis for the calculation of the premium enabling the retail customer to verify it;
(2) for non-investment insurance contracts of more than one year, details of the period for which the premium is valid, whether it will be reviewed at a certain time or at set periods and, if so, when it will be reviewed;
(3) fees, administrative charges and taxes payable by the retail customer via the insurance intermediary in addition to the premium. Fees and administrative charges include any interest payable on the premium, including where the premium is paid by way of a credit agreement taken out either for payment of the premium only or for the purpose of purchasing goods or services as well;
(4) a statement identifying separately the possibility of any taxes not payable via the insurance intermediary;
(5) where the non-investment insurance contract is purchased in connection with other goods or services:

(a) the premium for the non-investment insurance contract, separately from all other prices in relation to the other goods or services, if an additional price is charged; and
(b) whether purchase of the non-investment insurance contract is a requirement of purchasing the other goods or services or not; and

(6) the total price to be paid by the retail customer for the non-investment insurance contract.

14/01/2005

ICOB 5.5.14A

Where an exact amount, required to be included in a statement of price in accordance with ICOB 5.5.14 R, cannot be indicated, the statement of price must show the basis for calculation of the amount enabling the retail customer to verify it.

14/01/2005

ICOB 5.5.14B

A firm may only show the basis of calculation (in accordance with ICOB 5.5.14A R) if it is not possible to show an exact amount. So ICOB 5.5.14A R will not apply where, for example, a creditor insurance policy is financed by means of a loan agreement and it is possible to state the total amount payable in accordance with the requirements under the Consumer Credit Act 1974 to show the total price. In such cases ICOB 5.5.14 R (3) requires the interest payable on the premium to be stated, and ICOB 5.5.14 R (6) requires the total price to be stated.

14/01/2005

ICOB 5.5.15

An example of a situation where a premium could not be stated under ICOB 5.5.14 R(1) is a creditor insurance policy where the premium varies according to the level of debt. The statement of price should instead show the basis of calculation, for example, the premium as a percentage of the debt outstanding at specified dates.

14/01/2005

ICOB 5.5.15A

If the non-investment insurance contract contains optional elements of cover, the total amount of premium, or the basis for the calculation of the premium, required under ICOB 5.5.14 R(1) should include all optional elements of cover selected by the retail customer.

14/01/2005

Directive-required information

ICOB 5.5.16

The directive-required information referred to in this chapter is set out in ICOB 5.5.20 R, subject to ICOB 5.5.18 R to ICOB 5.5.19 R.

14/01/2005

ICOB 5.5.17

ICOB 5.5.20 R brings together all the directive-required information that must be provided under this chapter. Where information required under ICOB 5.5.20 R has already been provided to a customer in another document, for example a policy summary, it does not need to be provided a second time for the same contract unless required by a specific rule. In some instances it may be possible to meet similar requirements of more than one directive by a single statement, including requirements in ICOB 4.

14/01/2005

ICOB 5.5.18

The information in ICOB 5.5.20 R(2) and (3) need not be provided for a general insurance contract, if the United Kingdom is not the State of the risk.

14/01/2005

ICOB 5.5.19

(1) The information in (2) need not be provided for a non-investment insurance contract which is a pure protection contract if, at the time of application, the customer, other than an EEA ECA recipient, is habitually resident:

(a) in an EEA State other than the United Kingdom; or
(b) outside the EEA and he is not present in the United Kingdom.

(2) The information referred to in (1) is:

(a) ICOB 5.5.20 R(4) to (15); or
(b) ICOB 5.5.20 R(22), if the non-investment insurance contract was entered into before 1 July 1994.

14/01/2005

ICOB 5.5.20

Directive-required information to be provided to customers. This table belongs to ICOB 5.5.16 R.

Directive-required information to be provided to customers

For general insurance contracts (Third Non-Life Directive) other than certain¹distance contracts with retail customers:

(1)

if the insurance undertaking is an EEA firm:

(a)

the insurance undertaking's Home State and, where appropriate, the EEA State of the branch through which the non-investment insurance contract is to be concluded²; and

(b)

the address of the insurance undertaking's head office (and branch, if appropriate)²;

(2)

if the policyholder is a natural person, the law applicable to the general insurance contract where the parties do not have a free choice, or the fact that the parties are free to choose the law applicable and, in the latter case, the law the insurance undertaking proposes to choose; and

(3)

if the policyholder is a natural person, the arrangements for handling policyholder's complaints concerning general insurance contracts including, where appropriate, the existence of a complaints body, without prejudice to the policyholder's right to take legal proceedings.

Note 1: The information at (1) to (3) need not be provided for distance contracts where information is provided under the Distance Marketing Directive.

Note 2: The information in (1) must be stated in the policy document and any other document granting cover.

For non-investment insurance contracts that are pure protection contracts(Consolidated Life Directive)³ other than certain⁴ distance contracts with retail customers:

(4)

the name and legal form of the insurance undertaking;

(5)

the name of the EEA State in which the head office of the insurance undertaking and, where appropriate, the agency or branch concluding the non-investment insurance contract is situated;

(6)

the address of the insurance undertaking's head office and, where appropriate, of the agency or branch concluding the non-investment insurance contract;

(7)

the definition of each benefit and each option;

(8)

the term of the non-investment insurance contract;

(9)

the means of terminating the non-investment insurance contract;

(10)

the means of payment of premiums and duration of payments;

(11)

information on the premiums for each benefit, both main benefits and supplementary benefits, where appropriate;

(12)

information about cancellation in accordance with ICOB 5.3.21 R;

(13)

general information on the tax arrangements applicable to the type of non-investment insurance contract;

(14)

the arrangements for handling complaints concerning non-investment insurance contracts by policyholders, lives assured or beneficiaries under policies, including, where appropriate, the existence of a complaints body, making clear that its existence is without prejudice to the right to take legal proceedings; and

(15)

the law applicable to the non-investment insurance contract where the parties do not have a free choice or, if the parties are free to choose the law applicable, the law the insurance undertaking proposes to choose.

Note 3: The directive-required information at (4) to (15) must be in English unless the customer requests it to be, and the insurance undertaking agrees to it being, in another language.

Note 4: The information at (4) to (15) need not be provided for distance contracts where information is provided under the Distance Marketing Directive or equivalent legal requirement.

For non-investment insurance contracts with retail customers concluded by a means of distance communication, other than by telephone (Distance Marketing Directive):

(16)

the insurance undertaking

(a)

the name, main business of the insurance undertaking, and the geographical address of the insurance undertaking's head office and branch, where appropriate;

(b)

the trade register in which the insurance undertaking's is entered and its registration number or an equivalent means of identification in that register;

(c)

where the insurance undertaking activity is subject to an authorisation scheme, the particulars of the relevant supervisory authority;

(17)

the financial service

(a)

a description of the main characteristics of the non-investment insurance contract;

(b)

the total price to be paid by the retail customer to the insurance intermediary for the non-investment insurance contract, including all related fees, charges and expenses and all taxes paid via the insurance intermediary or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the retail customer to verify it;

(c)

notice of the possibility that other taxes and/or costs may exist that are not paid via the insurance intermediary or imposed by him;

(d)

any limitations of the period for which the information provided is valid;

(e)

the arrangements for payment and for performance of the non-investment insurance contract;

(f)

any specific additional cost for the retail customer of using the means of distance communication;

(18)

the distance contract

(a)

information about cancellation in accordance with ICOB 5.3.12 R;

(b)

information on any rights the insurance undertaking or the retail customer may have to terminate the non-investment insurance contract early or unilaterally, including any penalties imposed by the non-investment insurance contract in such cases;

(c)

the EEA State or States whose laws are taken by the insurance undertaking as a basis for the establishment of relations with the retail customer prior to the conclusion of the distance contract;

(d)

any contractual clause on law applicable to the policy or on competent court or both;

(e)

in which language, or languages, the contractual terms and conditions, and the prior information referred to in these rules are supplied, and furthermore in which language, or languages, the insurance undertaking, with the agreement of the retail customer, undertakes to communicate during the duration of the policy;

(19)

redress

(a)

whether or not there is an out-of-court complaint redress mechanism for the retail customer and, if so, the methods for having access to it; and

(b)

the existence of guarantee funds or other compensation arrangements.

For non-investment insurance contracts concluded by telephone with a retail customer who has agreed to limited information being provided before conclusion of the contract (Distance Marketing Directive):

(20)

before conclusion of the contract: the information specified in ICOB 5.3.6 R (2)(a) other than ICOB 5.3.6 R (2)(a)(viii); and

(21)

immediately after conclusion of the contract: the information referred to in sub-paragraphs (16) to (19) of this table.

Provisions applying during non-investment insurance contracts that are pure protection contracts:

(22)

any change to the information in sub-paragraphs (4) to (11) of this table.

01/11/2007

ICOB 5.5.22

Where a non-investment insurance contract is underwritten by more than one insurance undertaking, any rules in this chapter requiring information to be provided to a customer about the insurance undertaking before conclusion of the contract apply only to the first-named insurance undertaking. Details of all the insurance undertakings providing cover must be provided promptly after conclusion of the contract.

14/01/2005

ICOB 5.5.23

The relevant supervisory authority in ICOB 5.5.20 R(16)(c) will in most cases be the FSA. Where an incoming EEA firm is providing cross border services, the relevant supervisory authority will be its Home State Regulator.

14/01/2005

ICOB 5.5.24

A description of the main characteristics of a non-investment insurance contract in ICOB 5.5.20 R(17)(a) would include the information referred to at ICOB 5.5.5 R(3) to (5) and (7). For a non-investment insurance contract that is a pure protection contract a description would also include a definition of each benefit and each option; information on the premiums for each benefit and the means and duration of payment of them.

14/01/2005

ICOB 5.5.25

The relevant out-of-court complaint redress mechanism at ICOB 5.5.5 R(11) and ICOB 5.5.20 R(3), (14) and (19)(a) will in most cases be the Financial Ombudsman Service.

14/01/2005

ICOB 5.5.26

The relevant guarantee funds or other compensation arrangements referred to at ICOB 5.5.5 R(12) and ICOB 5.5.20 R(19)(b) will in most cases be the compensation scheme.

14/01/2005

Policy document

ICOB 5.5.27

A policy document must contain all the contractual terms and conditions.

14/01/2005

ICOB 5.5.28

The policy document provided to a customer should contain all the contractual terms and conditions of the contract of insurance with that customer. The policy document can consist of more than one document, but all the documents making up the policy document must be provided to the customer at the same time.

14/01/2005

ICOB 5.6

White labelling

14/01/2005

ICOB 5.6.1

The rules in this chapter and in ICOB 4 (Advising and selling standards) require the customer to be informed of the identity of both the insurance undertaking and the insurance intermediary. ICOB 2.2.3 R (Clear, fair and not misleading communication) requires all communications with customers to be clear, fair and not misleading. ICOB 5.5.5 R (Policy summary content) includes the name of the insurance undertaking but not that of the insurance intermediary and ICOB 5.5.1 R does not allow any information to be added to the policy summary in addition to that specified in ICOB 5.5.1 R. The combined effect of these rules is that an insurance intermediary must clearly communicate the identity of the insurance undertaking to the customer.

14/01/2005

ICOB 5.7

Record keeping

14/01/2005

ICOB 5.7.1

An insurer, or an insurance intermediary where an insurance undertaking does not operate from an establishment in the United Kingdom, must retain for a minimum period of three years after the information has been provided to the customer:

(1) a policy summary; and
(2) a policy document;

in relation to each non-investment insurance contract concluded.

14/01/2005

ICOB 5.7.2

If the policy summary and policy document are generic documents that are not specific to the customer, an insurer or an insurance intermediary can keep one copy of each document that it produces, but must retain a copy of any schedule for each customer that forms part of the policy document if the schedule is customer specific.

14/01/2005

ICOB 5.7.3

ICOB 2.8.6 G notes that a firm should consider keeping records for longer than three years in case customers complain or take legal action against the firm. An insurer or an insurance intermediary should in particular consider what constitutes an appropriate retention period for records which relate to non-investment insurance contracts which may give rise to claims some time after the inception of the contract (e.g. employers' liability insurance).

14/01/2005

ICOB 6

Cancellation

ICOB 6.1

Application and purpose

14/01/2005

Application: who?

ICOB 6.1.1

This chapter applies to:

(1) an insurer;
(2) a managing agent.

14/01/2005

ICOB 6.1.2

(1) Throughout this chapter references to an insurer apply equally to a managing agent.
(2) A managing agent must give effect to the policy in ICOB 6 that a retail customer must be offered cancellation rights.

14/01/2005

ICOB 6.1.3

This chapter sets out the cancellation rights that a firm must offer to a retail customer upon inception or renewal of specified contracts. A renewal only occurs if a further policy is entered into at the expiry of an existing policy. For example, a creditor policy that remains in existence from month to month until the policyholder attains a certain age, until cancelled by either party, or until lapse because of non-payment of premiums would not be considered as a policy with monthly renewal under the ICOB rules.

14/01/2005

Application: what?

ICOB 6.1.4

Apart from the exemptions set out in ICOB 6.1.5 R, this chapter applies to all non-investment insurance contracts.

14/01/2005

ICOB 6.1.5

This chapter does not apply to the following contracts:

(1) a travel and baggage insurance policy or similar short-term insurance policy of less than one month's duration;
(2) a non-investment insurance contract, the performance of which has been fully completed by both parties at the retail customer's express request before the retail customer exercises his right to cancel;
(3) a non-investment insurance contract that is a pure protection contract of six months' duration or less that is not a distance contract;
(4) a pure protection contract effected by the trustees of an occupational pension scheme, an employer or a partnership to secure benefits for the employees or the partners in the partnership;
(5) a general insurance contract that is not a distance contract sold by an intermediary who is an unauthorised person (except where the intermediary is an appointed representative); and
(6) a connected contract that is not a distance contract.

14/01/2005

ICOB 6.1.6

In ICOB 6.1.5 R(1) the 'similar short-term insurance policy' referred to is any contract of insurance where the event or activity being insured is less than one month's duration. The reference to 'duration' is to the period of the cover rather than the period of the contract. So the exemption will cover travel insurance for a fortnight's holiday, even if the insurance was taken out two months before the holiday began. However, if the period of cover includes cancellation of the holiday from the point at which the contract is taken out, the policy will not benefit from the exemption.

14/01/2005

ICOB 6.1.7

In relation to ICOB 6.1.5 R(2):

(1) a contract is not fully completed simply because an event has occurred which allows a claim to be made under the contract (for example, a claim for a cancelled flight or lost baggage); and
(2) a contract is fully completed where a claim has been made that leads to the contract being terminated. This could include a total loss claim (for example, a motor claim where the vehicle is written off and this results in termination of the contract).

14/01/2005

ICOB 6.1.8

For the purposes of this chapter, cancellation refers to the initial period of cover during which the contract may be voided. It does not refer to mid-term cancellation that a firm may choose to offer its customers.

14/01/2005

ICOB 6.1.9

The cancellation rights described in this chapter apply to all renewals and not just those where there have been significant changes.

14/01/2005

ICOB 6.1.10

Where ICOB 6.1.5 R applies and there is no cancellation right, a firm should inform the retail customer of that fact in accordance with ICOB 5.3.12 R(1).

14/01/2005

Purpose

ICOB 6.1.11

(1) This chapter reinforces Principle 6 (Customers' interests) which requires a firm to pay due regard to the interests of its customers and treat them fairly. In certain circumstances, retail customers who have entered into a non-investment insurance contract will be entitled to a period of reflection during which they can decide whether to proceed with their purchase.
(2) This chapter also implements, where relevant, elements of the Distance Marketing Directive and the Consolidated Life Directive relating to the cancellation of distance contracts and non-investment insurance contracts that are pure protection contracts.

01/11/2007

ICOB 6.2

Cancellation rights and period

14/01/2005

ICOB 6.2.1

A retail customer has a right to cancel a non-investment insurance contract in accordance with ICOB 6.2, ICOB 6.3 and ICOB 6.4.

14/01/2005

ICOB 6.2.2

The period of cancellation is:

(1) 30 days for a non-investment insurance contract that is a pure protection contract; and
(2) 14 days for a general insurance contract.

14/01/2005

ICOB 6.2.3

Where the terms of an insurer's contract give a retail customer a longer period to cancel (that is, in excess of the 14 or 30 days specified), the insurer must disclose in the information about the right to cancel the differences between the retail customer's right under ICOB 6.2.1 R and the terms of the contract, which operate independently.

14/01/2005

ICOB 6.2.4

Where a contract is a mixed contract, that is, it has elements of both a general insurance contract and a pure protection contract, a 30 day cancellation period must apply.

14/01/2005

ICOB 6.2.5

The cancellation period in ICOB 6.2.2 R must begin on the later of:

(1) (for a non-investment insurance contract that is a pure protection contract) the day the retail customer is informed that the contract has been concluded; or
(2) (for a general insurance contract) the day of the conclusion of the contract; or
(3) the day on which the retail customer receives the contractual terms and conditions and information in accordance with ICOB 5.3.4 R, ICOB 5.3.6 R(1) or ICOB 5.3.8 R in a durable medium.

14/01/2005

ICOB 6.2.6

(1) Where ICOB 6.2.5 R(3) applies, an insurer is entitled to assume that documents have been received in accordance with generally accepted principles of law. That is:

(a) that provided the document is sent to the correct address or number, documents posted first class on business day 1 are received on business day 2;
(b) that a fax is received when sent, if an appropriate transmission report is generated by the transmitter's machine; and
(c) that an e-mail is received when sent.

(2) The general assumptions in ICOB 6.2.6 G(1) can be contradicted by a retail customer. In such cases the burden would be on the retail customer to show that the evidence on which the insurer was relying was not correct. If the retail customer could show this then unless the insurer itself had information to suggest that this was not the case, the insurer should generally accept the retail customer's evidence.

14/01/2005

ICOB 6.2.7

The provisions in ICOB 6.2.5 R(3), under which time may run from the day on which the retail customer receives the contractual terms and conditions and information in accordance with ICOB 5.3.4 R, ICOB 5.3.6 R(1) or ICOB 5.3.8 R, as applicable, would cover situations where:

(1) the contract has been concluded by a means of distance communication by which the contractual information could not reasonably have been provided prior to the conclusion of the contract in a durable medium (for example, by telephone) and is therefore provided subsequently; or
(2) the contract is not a distance contract and the retail customer has not received the contractual terms and conditions in a durable medium before the conclusion of the contract.

01/11/2007

ICOB 6.2.8

If an insurer has provided information in accordance with ICOB 5.3.4 R, ICOB 5.3.6 R(1) or ICOB 5.3.8 R in a durable medium, it need not accept a notice of cancellation if it is served later than the period specified for that contract.

14/01/2005

ICOB 6.2.9

If a firm does not give a retail customer information about his cancellation rights in a durable medium in accordance with ICOB 5.3.12 R, the contract is cancellable.

14/01/2005

ICOB 6.3

Notification of cancellation by the retail customer

14/01/2005

ICOB 6.3.1

A retail customer who has a right to cancel under ICOB 6.2.1 R may, without giving any reason, cancel the contract by serving notice upon the insurer, its appointed representative or any agent of the insurer with authority to accept notice on the insurer's behalf before expiry of the relevant cancellation period, in accordance with the practical instructions given to him in accordance with ICOB 5.3.12 R.

14/01/2005

ICOB 6.3.2

Where the notice of cancellation is in a durable medium and served in accordance with ICOB 6.3.1 R, it must be treated as being served on the insurer on the date it is despatched by the retail customer.

14/01/2005

ICOB 6.3.3

In the event of any dispute, unless there is clear written evidence to the contrary, an insurer should treat the date cited by the retail customer as being the date when the notice of cancellation was given, posted or otherwise sent.

14/01/2005

ICOB 6.3.4

In order to ensure that a retail customer returns to the insurer any insurance certificate that the insurer may provide as part of the non-investment insurance contract (for example, the motor insurance certificate), the insurer may wish to consider putting the notice of cancellation on the insurance certificate itself and instructing the retail customer, prior to the conclusion of the contract in accordance with ICOB 5.3.12 R(2)(d), to exercise this right of cancellation by returning the certificate. Unless these instructions are given to the retail customer in accordance with ICOB 5, an insurer will not be able to require cancellation to be exercised in this way.

14/01/2005

ICOB 6.4

Effects of cancellation

14/01/2005

ICOB 6.4.1

By exercising his right to cancel under ICOB 6.2.1 R, a retail customer withdraws from the contract.

14/01/2005

Automatic cancellation of an attached distance contract

ICOB 6.4.2

(1) Regulation 12 (Automatic cancellation of an attached distance contract) of the Distance Marketing Regulations has the effect that, when notice of cancellation is given in relation to a contract, that notice also operates to cancel any attached contract which is also a distance financial services contract which does not fall within one of the exceptions to the right to cancel in Regulation 11 (Exceptions to the right to cancel) of the Distance Marketing Regulations, unless the retail customer gives notice that cancellation of the main contract is not to operate to cancel the attached contract. So the attached contract will not be cancelled if the price of the service depends on fluctuations in the financial market outside the firm's control or if performance of the contract has been fully completed by both parties at the retail customer's express request. Whether a contract will be 'attached' to the main contract will depend on the circumstances in each case. Regulation 12(1) provides that the contract will be attached if any of the following conditions are satisfied:

(a) it has been entered into in compliance with a term of the main contract;
(b) the main contract is financed or is to be financed by the contract;
(c) the main contract is a debtor-creditor-supplier agreement within the meaning of the Consumer Credit Act 1974 and the contract is to be financed by the main contract;
(d) the retail customer has entered into the contract to induce the supplier to enter into the main contract; or
(e) performance of the contract requires performance of the main contract.

(2) A retail customer will also have an independent right to cancel an attached distance contract and may do so without cancelling the main contract.

14/01/2005

Payments

ICOB 6.4.3

Where a retail customer exercises a right to cancel under ICOB 6.2.1 R:

(1) the insurer must pay to the retail customer without delay, and no later than 30 days after the date on which the insurer received notice of cancellation from the retail customer, any sums which the retail customer has paid to, or for, the benefit of the insurer in connection with the contract (including sums paid by the retail customer to agents of the insurer) except for the amount referred to in (2);

(2) where the contract is a general insurance contract, subject to (3), the insurer is permitted to require the retail customer to pay for the services it has actually provided in connection with the contract. The amount payable, however, must not:

(a) exceed an amount which is in proportion to the extent of the service already provided to the retail customer by the insurer in comparison with the full coverage of the contract; and

(b) be such that it could be construed as a penalty;

(3) sub-paragraph (2) applies only:

(a) where performance of the contract has commenced before expiry of the cancellation period and this was requested by the retail customer; and

(b) where the insurer can demonstrate that the retail customer was provided with details of the amount which he may be required to pay if exercising his right to cancel in accordance with ICOB 6.2.1 R;

(4) the insurer is entitled to receive without delay, and no later than 30 days after the date on which the retail customer posted or otherwise sent notice of cancellation to the insurer any sums and property that became the retail customer's under the contract.

14/01/2005

ICOB 6.4.4

(1) The amount referred to in ICOB 6.4.3 R(2) may include any sums that the insurer has reasonably incurred in concluding the general insurance contract but should not include any element of profit.
(2) An insurer and insurance intermediary should take reasonable steps to ensure that double recovery of selling costs is avoided, particularly where:

(a) there is also a distance non-investment mediation contract (see ICOB 8); or
(b) both commission and fees are recouped by an insurer and an insurance intermediary respectively.

14/01/2005

ICOB 6.4.5

The amount referred to in ICOB 6.4.3 R(2) may include:

(1) an amount for the cover provided (i.e. a proportion of the contract of insurance's exposure that relates to the time on risk);
(2) a proportion of the commission paid to the insurance intermediary sufficient to cover that insurance intermediary's costs; and
(3) a proportion of any fees charged by the insurance intermediary, which, when aggregated with any commission to be repaid, would be sufficient to cover the insurance intermediary's costs.

14/01/2005

ICOB 6.4.6

In the event that a retail customer exercises his right to cancel, the amount described in ICOB 6.4.3 R(2) will normally be retained by the insurer (although in some circumstances it could be retained by the insurance intermediary). The insurer and the insurance intermediary should, therefore, agree the terms by which the insurer reimburses the insurance intermediary (or the reverse).

14/01/2005

ICOB 6.4.7

In calculating the charge in accordance with ICOB 6.4.3 R(2), an insurer should use a reasonable method of estimating the proportion of the contract of insurance's exposure that relates to the time on risk.

14/01/2005

ICOB 6.4.8

In most cases, the FSA would expect the proportion of the insurance contract's exposure that relates to the time on risk to be a pro rata apportionment. However, where there is material unevenness in the incidence of risk, the insurer could employ a more accurate method, which may result in a lower or higher charge to the retail customer. In such cases, the insurer may charge what it believes to be a reasonable sum, but it should bear in mind that the sum should not exceed an amount commensurate to the risk incurred.

14/01/2005

ICOB 6.4.9

Where an insurer has made a charge for services provided in accordance with ICOB 6.4.3 R(2), the sums and property referred to in ICOB 6.4.3 R(4) must not include any money or property that the insurer has provided to the retail customer in connection with a claim.

14/01/2005

ICOB 6.4.10

Any sum payable under ICOB 6.4.3 R is owed as a simple contract debt, and any sums payable in respect of the cancellation of the same contract may where relevant be set off against each other.

14/01/2005

ICOB 7

Claims
handling

ICOB 7.1

Application and purpose

14/01/2005

Application: who and what?

ICOB 7.1.1

(1) This chapter applies, except for ICOB 7.6, in respect of claims handling under a non-investment insurance contract to:

(a) an insurer;
(b) an insurance intermediary;
(c) a managing agent.

(2) ICOB 7.6 applies in respect of motor vehicle liability insurance business to:

(a) a motor vehicle liability insurer; and
(b) the Society.

14/01/2005

ICOB 7.1.2

Throughout this chapter, references to an insurer apply equally to a managing agent.

14/01/2005

ICOB 7.1.3

An insurer is responsible for claims handling. A managing agent is responsible for claims handling for policies underwritten at Lloyd's. An insurer or managing agent remains responsible for claims handling if it outsources any of its claims related activities, including where it gives an intermediary authority to handle claims on its behalf. An insurer or a managing agent is not responsible for the administration and performance activities that an insurance intermediary carries out on behalf of a customer in connection with a claim. In relation to these activities, the insurance intermediary should refer to ICOB 7.4.

14/01/2005

ICOB 7.1.4

An insurer should refer to the rules and guidance set out in SUP 2.3.5 to SUP 2.3.10 in respect of any person to whom it outsources its claims handling functions.

14/01/2005

ICOB 7.1.5

All of this chapter, except ICOB 7.6, applies to claims made by retail customers. Part of ICOB 7.3, all of ICOB 7.4 and all of ICOB 7.7 apply to claims made by commercial customers. ICOB 7.6 applies to certain claims by injured parties arising from accidents occurring in the EEA involving the use of vehicles.

11/06/2007

Purpose

ICOB 7.1.6

(1) The purpose of this chapter is to ensure that:

(a) claims are handled fairly;
(b) claims are settled promptly;
(c) customers are provided with information on the claims handling process, and with an explanation of why a claim is rejected or not settled in full, where relevant; and
(d) insurance intermediaries disclose and manage any conflicts of interest that may exist.

(2) This chapter reinforces:

(a) Principle 3 (Management and control), which requires a firm to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems;
(b) Principle 6 (Customers interests), which requires a firm to pay due regard to the interests of its customers and treat them fairly; and
(c) Principle 8 (Conflicts of interest), which requires a firm to manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.

(3) The purpose of ICOB 7.6 is to transpose certain requirements of the Fourth Motor Insurance Directive and the Fifth Motor Insurance Directive.

11/06/2007

ICOB 7.2

Group policies and third party claimants

14/01/2005

ICOB 7.2.1

Any person who, under the terms of a policy, has a right to claim directly on the insurer, is a policyholder (see ICOB 1.2.15 R to ICOB 1.2.16 G). When dealing with claims under group policies, insurers should consider whether the person claiming is a commercial customer or a retail customer and should apply the rules in this chapter accordingly when dealing with a customer's claim.

14/01/2005

ICOB 7.2.2

When an insurer deals directly with a third party who claims against his customer because the third party has a legal right to bypass the customer and claim directly against the insurer (for example, certain motor claims or because of the insolvency of the customer), these rules do not require the insurer to treat the third party as a customer. However, the insurer should have regard to Principle 1 (Integrity), Principle 2 (Skill, care and diligence) and Principle 5 (Market conduct) in its dealings with the third party and should not deal with the claim in any way less favourably than it would have done had the claim been proceeded against its customer.

14/01/2005

ICOB 7.3

Claims handling: general

14/01/2005

Requirement to handle claims promptly and fairly

ICOB 7.3.1

An insurer must carry out claims handling promptly and fairly.

14/01/2005

ICOB 7.3.2

When handling the claim of a retail customer, an insurer should comply with the rules and guidance in ICOB 7.5. When handling the claim of a commercial customer, an insurer should ensure that:

(1) the commercial customer is kept reasonably informed of how his claim is progressing; and
(2) payment is made promptly once settlement terms have been agreed.

14/01/2005

ICOB 7.3.3

An insurer should refer to the guidance in SYSC 3.2 (Areas covered by systems and controls) in its procedures for claims handling. For example, an insurer should have in place systems and controls which take account of reasonably foreseeable peaks in demand, to allow it to deal with claims promptly in such circumstances.

14/01/2005

ICOB 7.3.4

An insurer should refer to the guidance on the competent employees rule in SYSC 3 in respect of the competence of any person who carries out claims handling on its behalf.

01/11/2007

Giving customers guidance on claiming

ICOB 7.3.5

When an insurer is informed that a customer wishes to claim under his policy it must give the customer reasonable guidance to help him make a claim under his policy.

14/01/2005

Rejecting or refusing claims

ICOB 7.3.6

An insurer must not:

(1) unreasonably reject a claim made by a customer;
(2) except where there is evidence of fraud, refuse to meet a claim made by a retail customer on the grounds:

(a) of non-disclosure of a fact material to the risk that the retail customer who took out the policy could not reasonably be expected to have disclosed;
(b) of misrepresentation of a fact material to the risk, unless the misrepresentation is negligent;
(c) in the case of a general insurance contract, of breach of warranty or condition, unless the circumstances of the claim are connected with the breach; or
(d) in the case of a non-investment insurance contract which is a pure protection contract, of breach of warranty, unless the circumstances of the claim are connected with the breach and unless:

(i) under a life of another contract, the warranty relates to a statement of fact concerning the life to be assured and that statement would have constituted grounds for rejection of a claim by the insurer under ICOB 7.3.6 R(2)(a) or (b) if it had been made by the life to be assured under an own life contract; or
(ii) the warranty is material to the risk and was drawn to the attention of the retail customer who took out the policy before the conclusion of the contract.

06/03/2006

ICOB 7.4

Duties of insurance intermediaries

14/01/2005

ICOB 7.4.1

ICOB 7.4 applies to an insurance intermediary.

14/01/2005

ICOB 7.4.2

ICOB 7.4 will usually apply to an insurance intermediary that is not an insurer, but it may also apply to an insurer, for example, if it were dealing with a claim on a policy insured by another insurance undertaking.

14/01/2005

An insurance intermediary's duty of care, skill and diligence

ICOB 7.4.3

An insurance intermediary, when acting for a customer in relation to a claim, must act with due care, skill and diligence.

14/01/2005

ICOB 7.4.4

The rules and guidance in ICOB 7.4 do not seek to set out the full extent of the duties owed by the insurance intermediary to any person for whom it acts, nor do they displace the general law on the duties of an insurance intermediary.

14/01/2005

An insurance intermediary's duty to avoid conflicts of interest

ICOB 7.4.5

(1) An insurance intermediary must not, in connection with any claim, put itself in a position where its own interest, or its duty to any person for whom it acts, conflicts with its duty to any customer, unless:

(a) it made proper disclosure to its customer of all information needed to put its customer in a position where he can give informed consent to the arrangement; and
(b) it has obtained the prior informed consent of the customer.

(2) An insurance intermediary must decline to act for the person or customer referred to in (1) or any of them unless, in the particular circumstances of the case, disclosure and informed consent are sufficient to enable it to reconcile the conflict.

14/01/2005

ICOB 7.4.6

ICOB 7.4.5 R imposes a requirement on an insurance intermediary to avoid conflicts of interest in relation to claims where it acts on behalf of a customer, unless it can manage them by disclosure to, and the obtaining of consent from, its customer.

14/01/2005

ICOB 7.4.7

An insurance intermediary should consider whether it is possible to manage the conflict by disclosing the conflict to the customer and obtaining his consent. Where an insurance intermediary acts for a customer in arranging a policy, it is likely to be the agent for that customer and any other customers who are policyholders under that policy in connection with the preparation and handling of any claim against the insurance undertaking. If the insurance intermediary intends to be the agent of an insurance undertaking in relation to claims under that policy, it will need to consider whether it is at risk of putting itself in the position where it cannot act without some breach of duty either to the insurance undertaking or the customer making the claim. The insurance intermediary should consider whether disclosure and consent are sufficient to reconcile the conflicting obligations. An example of a circumstance in which disclosure and consent are unlikely to be sufficient, and when an insurance intermediary may well consider that it should not act for the insurance undertaking or the customer (or both), is where the insurance intermediary knows that its customer will, to obtain a quick payment, accept a low amount in settlement of a claim and also knows the insurance undertaking is willing to settle for a higher amount.

06/03/2006

ICOB 7.4.7A

ICOB 7.4.5 R to ICOB 7.4.7 G do not apply to a common platform firm if SYSC 10.1 (conflicts of interest) applies to the firm.

01/01/2007

Other notifications and actions in relation to claims

ICOB 7.4.8

If an insurance intermediary acts for an insurance undertaking and not a customer in relation to a claim on a contract which it arranged, the insurance intermediary must inform the customer that, in relation to that claim, it is acting on behalf of the insurance undertaking, and not the customer.

06/03/2006

ICOB 7.4.9

ICOB 7.4.8 R would apply, for example, where an insurance intermediary has delegated authority for claims handling and deals with a claim in relation to a contract that it sold to a customer, if the insurance intermediary is not acting on behalf of that customer in relation to the claim.

14/01/2005

ICOB 7.4.10

If an insurance intermediary is notified of a claim in relation to a policy which it has arranged, and the insurance undertaking has not given it the authority to deal with that claim, it must:

(1) forward the notification to the insurance undertaking promptly; or
(2) inform the customer immediately that it cannot deal with the notification.

14/01/2005

ICOB 7.5

Retail customers: performance standards for handling claims

14/01/2005

Responding to notification of the claim

ICOB 7.5.1

An insurer must respond promptly to a notification by a retail customer of a claim.

14/01/2005

ICOB 7.5.2

Notification of a claim is a demand of the insurer to pay or provide a benefit insured under the policy, e.g. by submitting a claim form or giving the equivalent information orally, where permitted by the policy. An enquiry that precedes such a demand, for example, as to whether a particular loss is covered, and therefore whether a claim could be made under the terms of the policy, is not notification of a claim.

14/01/2005

ICOB 7.5.3

ICOB 7.5.1 R requires an insurer to respond promptly once it has received notification of a claim. Generally a prompt response would be one within five business days of a retail customer making a claim, although in some circumstances, a prompt response could be less than five business days, such as where the retail customer would expect a swifter response because of the nature of the claim or the terms of the policy (for example, a roadside assistance policy).

14/01/2005

ICOB 7.5.4

The response referred to in ICOB 7.5.1 R must:

(1) provide the information set out in ICOB 7.5.5 R;
(2) be in a durable medium, unless the notification by the retail customer is made orally and the insurer does not require the retail customer to complete a claim form; and
(3) provide the retail customer with a claim form, if the insurer requires one to be completed.

14/01/2005

ICOB 7.5.5

The information referred to in ICOB 7.5.4 R(1) is:

(1) that the claim relates to a risk that is clearly outside the scope of the policy, if that is the case (in which case no further information need be provided);
(2) the action that will be taken by the insurer, and when that action will be taken;
(3) if the insurer is appointing any other parties to contact the retail customer on the insurer's behalf, in respect of each other party appointed the following information, if known (but, if the purpose of the appointment is to investigate the validity of a claim, the information need not be given if to give it would limit or prevent the effective investigation of the claim or any part of it):

(a) its name (unless the other party trades under the name of the insurer);
(b) its function; and
(c) the work it will carry out in relation to the claim.

14/01/2005

ICOB 7.5.6

The purpose of the rules and guidance in ICOB 7.5.1 R to ICOB 7.5.5 R is to provide the retail customer at an early stage with information in relation to the processing and settlement of his claim by the insurer. ICOB 7.5.5 R(1) is intended to prevent a retail customer pursuing a claim for which he is clearly not covered, for example, making a claim on a contents insurance policy for possessions away from home, when the policy only covers possessions in the home. It is not intended to pre-empt the outcome of an investigation of a claim.

14/01/2005

ICOB 7.5.7

The purpose of ICOB 7.5.5 R(3) is to ensure that a retail customer knows the name and function of any party who will contact him in relation to a claim as a representative of the insurer e.g. an outsourced claims handling company or a loss adjuster. An insurer would not be expected to notify the retail customer of other parties who are appointed to investigate the validity of a claim, if this would limit or prevent an effective investigation. However, if a third party such as a loss adjuster is appointed to liaise with the retail customer on the insurer's behalf, as well as assess the validity of the claim, the insurer would be expected to disclose the information in ICOB 7.5.5 R(3) unless it would limit or prevent an effective investigation.

14/01/2005

Investigation and processing of the claim

ICOB 7.5.8

An insurer must keep the retail customer reasonably informed about the progress of his claim.

14/01/2005

ICOB 7.5.9

Where the investigation of a claim is likely to be protracted, an insurer should provide periodic progress or status reports, when appropriate, to a retail customer, including providing the retail customer with any relevant update in relation to the information provided under ICOB 7.5.5 R. The insurer should also respond without undue delay to any reasonable request by the retail customer for information.

14/01/2005

Determining the claim

ICOB 7.5.10

An insurer must notify the retail customer as soon as practicable whether it:

(1) rejects all of his claim;
(2) rejects his claim but, without prejudice to the rejection, makes an offer in compromise; or
(3) accepts all or part of his claim.

14/01/2005

ICOB 7.5.11

If the insurer rejects the claim, but without prejudice to the rejection makes an offer in compromise, it must notify the retail customer of the terms of that offer as soon as practicable.

14/01/2005

ICOB 7.5.12

If the insurer accepts all or part of the retail customer's claim, it must notify the retail customer as soon as practicable whether:

(1) as to the parts it accepts, it agrees to provide the money, property or service claimed by the retail customer in full; or
(2) it makes some other offer in compromise. In that event, it must notify the retail customer of the terms of its offer.

14/01/2005

ICOB 7.5.13

(1) Unless the insurer accepts the retail customer's claim in full, the insurer must explain why it rejects all or part of the retail customer's claim or makes a compromise offer, specifying any relevant term of the policy.
(2) The insurer must offer the retail customer the choice of receiving the information at ICOB 7.5.13 R(1) in a durable medium.

14/01/2005

ICOB 7.5.14

Motor vehicle liability insurers should refer to the rules and guidance at ICOB 7.6.8 R to ICOB 7.6.11 G in respect of a claim for damages by an injured party in the circumstances set out in ICOB 7.6.11 G (1).

14/01/2005

ICOB 7.5.15

The insurer must, in respect of each part of the claim that it accepts, inform the retail customer whether the claim will be settled by paying him, or by paying another person to provide goods or services, or by providing those goods or services.

14/01/2005

ICOB 7.5.16

Examples of a payment to others for the provision of goods or services are: to a garage for repairs carried out to a vehicle, to a supplier for the provision of replacement electrical goods, or to a doctor for medical treatment.

14/01/2005

Settling a claim

ICOB 7.5.17

An insurer must settle a claim by a retail customer promptly.

14/01/2005

ICOB 7.5.18

(1) Settlement terms are agreed when:

(a) the insurer accepts the retail customer's claim; and
(b) the retail customer accepts the insurer's offer of settlement.

(2) When the insurer settles the claim by paying the retail customer, the insurer should aim to make payment within five business days after the insurer and the retail customer have agreed settlement terms, subject to any pre-conditions laid down by the insurer or in law being met by the retail customer. This does not prevent the insurer paying a claim before the retail customer has finally agreed settlement terms.
(3) The guidance in (2) would not apply if the non-investment insurance contract otherwise provides, or the insurer settles the claim by:

(a) payment against a liability due on a future date;
(b) the provision of goods or services;
(c) making payments on a date specified by the retail customer; or
(d) payment of the claim through an employer or other party on a monthly or some other basis;

and in the case of (a) or (b) the insurer should make prompt payment or arrange for prompt provision of the goods or services after the insurer and the retail customer have agreed settlement terms.

14/01/2005

ICOB 7.5.19

The arrangements for settlement set out in ICOB 7.5.18 G(3)(a) are likely to apply, for example, when payments are made under a creditor insurance policy to meet periodic repayments due under a loan agreement.

14/01/2005

ICOB 7.5.20

The arrangements for settlement set out in ICOB 7.5.18 G(3)(b) apply to arrangements to supply goods or services to the retail customer. In such situations, the goods or services should be provided promptly, but where they cannot be the insurer should tell the retail customer when to expect them.

14/01/2005

ICOB 7.5.21

An insurer should note that unless it has previously informed a retail customer that a claim will not be met in full or in part until premiums have been paid, the insurer may not delay payment of a claim on the grounds that premiums are outstanding.

14/01/2005

Pre-action protocols

ICOB 7.5.22

A customer who does not accept an insurer's rejection of his claim (or part of it) may challenge that rejection. If he chooses to do so through the courts, firms should be aware that in England and Wales there are pre-action protocols which lay down certain requirements as to the steps to be taken before proceedings are issued. This chapter does not displace these requirements, to which firms should have regard in the event that a rejection of a claim moves towards litigation.

14/01/2005

ICOB 7.6

Motor vehicle liability insurers: claims representatives and claims handling rules

11/06/2007

Motor vehicle liability insurers: claims representatives

ICOB 7.6.1

(1) Under threshold condition 2A (Appointment of claims representatives), if it appears to the FSA that any person is seeking to carry on, or is carrying on, motor vehicle liability insurance business, that person must have a claims representative in each EEA State other than the United Kingdom.
(2) If any person carrying on motor vehicle liability insurance business becomes aware, or has information which reasonably suggests, that that person has failed to satisfy, may have failed to satisfy or may not in the foreseeable future be able to satisfy, threshold condition 2A (or any threshold condition), that person must notify the FSA immediately (see SUP 15.3.1)

14/01/2005

ICOB 7.6.2

The Society must ensure that no member carries on motor vehicle liability insurance business at Lloyd's unless a claims representative has been appointed to act for that member in each EEA State other than the United Kingdom, with responsibility for handling and settling claims arising from an accident in the cases referred to in Article 1 of the Fourth Motor Insurance Directive.

14/01/2005

ICOB 7.6.3

(1) When a motor vehicle liability insurer for which the United Kingdom is the Home State appoints a claims representative, it must give the MIIC, and each other information centre, the claims representative's name, business address, telephone number and effective date of appointment within ten business days of that appointment being made.
(2) If the information at (1) changes in any material way, the motor vehicle liability insurer must be given the MIIC, and each other information centre, details of that change within ten business days of the change

[Note: article 5(2) of the Fourth Motor Insurance Directive]

11/06/2007

ICOB 7.6.4

A motor vehicle liability insurer for which the United Kingdom is the Home State must ensure that each claims representative is:

(1) resident or established in the EEA State for which it is appointed;
(2) capable of examining cases in the official language or languages of the EEA State of residence of the injured party;
(3) responsible for, and has sufficient delegated authority from the motor vehicle liability insurer for which it is appointed, to be able to:

(a) handle and settle;
(b) collect all information, and take all measures, reasonably necessary to negotiate a settlement of; and
(c) represent, or arrange appropriate representation for, the motor vehicle liability insurer (whether in negotiations, in court or otherwise) in relation to;

claims by an injured party arising from an accident occurring in an EEA State other than the EEA State of residence of the injured party, and caused by the use of a vehicle insured through an establishment, and normally based, in an EEA State other than the EEA State of residence of the injured party.

[Note: article 1(1) and (2) and Article 4(1), (4) and (5) of the Fourth Motor Insurance Directive]

11/06/2007

ICOB 7.6.5

ICOB 7.6.4 R(3) does not prevent a claims representative from seeking additional authority or instructions from a motor vehicle liability insurer, if its existing authority or instructions are insufficient to allow it to handle and settle a claim. However, it does prevent a claims representative from purporting to decline to deal with, or transfer responsibility for, claims properly referred to that claims representative by an injured party, or an injured party's representative.

14/01/2005

ICOB 7.6.6

Nothing in the rules and guidance at ICOB 7.6 prevents, or is intended to prevent:

(1) a motor vehicle liability insurer from appointing more than one claims representative in one, or more than one, EEA State; or
(2) a claims representative from acting for more than one insurer or member; or
(3) a representative, appointed by a motor vehicle liability insurer under SUP 13.5.2 or regulation 3(d) of the EEA Passport Rights Regulations, from acting as that motor vehicle liability insurer's claims representatives as well.

14/01/2005

ICOB 7.6.7

The appointment of a claims representative does not in itself constitute the opening of a branch or the creation of an establishment (see article 4(8) of the Fourth Motor Insurance Directive).

14/01/2005

Motor vehicle liability claims handling rules

ICOB 7.6.8

(1) Within three months of receipt of a claim for damages caused by a vehicle normally based in the United Kingdom from an injured party, or his representative, the motor vehicle liability insurer must (directly, or through a claims representative):

(a) make a reasoned offer of settlement if liability is admitted and damages have been fully quantified; or
(b) provide a reasoned reply to the points made in the injured party's claim if liability is denied, or not admitted, or the claim for damages has not been fully quantified.

(2) If liability is initially denied, or not admitted, within three months of any subsequent admission of liability, the motor vehicle liability insurer must (directly, or through a claims representative) make a reasoned offer of settlement, if, by that time, the relevant claim for damages has been fully quantified.
(3) If an injured party's claim for damages is not fully quantified when it is first made, within three months of the subsequent receipt of a fully quantified claim for damages, the motor vehicle liability insurer must (directly, or through a claims representative) make a reasoned offer of damages, if liability is admitted at that time.
(4) A claim for damages will be fully quantified under (1)(a), (2) or (3) when the injured party provides written evidence which substantiates or supports the amounts claimed.

[Note: article 4(6) of the Fourth Motor Insurance Directive and Article 4(4)(4e, first paragraph) of the Fifth Motor Insurance Directive]

11/06/2007

ICOB 7.6.9

(1) If the motor vehicle liability insurer, or its claims representative, does not comply with ICOB 7.6.8 R(1)(a), (2) or (3), the motor vehicle liability insurer must pay simple interest on any damages eventually paid, unless interest is awarded by any tribunal which determines the injured party's claim.
(2) If (1) applies, the amount of interest that the motor vehicle liability insurer must pay must be calculated as follows:

(a) the interest calculation period begins three months after:

(i) receipt of the claim for damages, if the motor vehicle liability insurer or its claims representative breaches ICOB 7.6.8 R(1)(a); or
(ii) any subsequent admission of liability, if the motor vehicle liability insurer or its claims representative complies with ICOB 7.6.8 R(1)(a) but breaches ICOB 7.6.8 R(2); or
(iii) the subsequent receipt of a fully quantified claim for damages, if the motor vehicle liability insurer or its claims representative complies with ICOB 7.6.8 R(1)(a) and (2) but breaches ICOB 7.6.8 R(3); and

(b) the interest calculation period ends on the date when the motor vehicle liability insurer pays compensation to the injured party, or the injured party's authorised representative;
(c) the interest rate to be applied throughout the period in (a) to (b) is the Bank of England's base rate (from time to time), plus four per cent.

14/01/2005

ICOB 7.6.10

A motor vehicle liability insurer will be taken to have received a claim, or a fully quantified claim, for damages when that claim, or fully quantified claim, for damages is delivered to the motor vehicle liability insurer, or a claims representative, by any person by any method of delivery which is lawful in the motor vehicle liability insurer's, or its claims representative's, respective State of residence or establishment.

14/01/2005

ICOB 7.6.11

The rules and guidance at ICOB 7.6.1 G to ICOB 7.6.10 R are not intended to, and do not, restrict any rights which the injured party, or its motor vehicle liability insurer, or any other insurer acting on its behalf, may have and which would enable any of them to begin legal proceedings against the person causing the accident or that person's, or the vehicle's, insurers.

11/06/2007

ICOB 7.7

Record keeping

14/01/2005

ICOB 7.7.1

An insurer must make and retain for the duration of the claim and for a minimum of three years after it has been settled or rejected, the following information in relation to each claim made against a policy issued by it or handled by it:

(1) details of the claim;
(2) the date the claim was settled or rejected and details of settlement or rejection including information relevant to the basis for the settlement or rejection.

14/01/2005

ICOB 8

Distance non-investment mediation contracts with retail customers

ICOB 8.1

Application and purpose

14/01/2005

Application: who? and what?

ICOB 8.1.1

This chapter applies to an insurance intermediary in relation to a distance non-investment mediation contract with a retail customer.

14/01/2005

Purpose

ICOB 8.1.2

The purpose of ICOB 8 is to set out the rules that apply in relation to a distance non-investment mediation contract.

14/01/2005

ICOB 8.1.3

This chapter implements articles 3, 5, 6, 7 and 9 of the Distance Marketing Directive for distance non-investment mediation contracts with retail customers.

01/11/2007

ICOB 8.1.4

As ICOB 1.7.3 G(4) indicates, the FSA expects the requirements set out in ICOB 8 to be relevant only in a small minority of cases.

14/01/2005

ICOB 8.2

General rules

14/01/2005

ICOB 8.2.1

The provisions of ICOB 2 apply in relation to a distance non-investment mediation contract.

14/01/2005

ICOB 8.3

Disclosure requirements

14/01/2005

ICOB 8.3.1

An insurance intermediary must provide a retail customer with:

(1) the information in ICOB 8.3.3 R; and
(2) the full terms of the distance non-investment mediation contract;
in a durable medium in good time before the conclusion of the distance non-investment mediation contract, unless an exemption in ICOB 8.3.6 R applies or the information has already been provided under the rules in ICOB 4.

14/01/2005

ICOB 8.3.2

For the purposes of ICOB 8.3.1 R, information will be provided 'in good time' if provided in sufficient time to enable the retail customer to consider properly the services on offer.

14/01/2005

ICOB 8.3.3

Status disclosure requirements for distance non-investment mediation contracts

This table belongs to ICOB 8.3.1 R(1)

The name and address of the insurance intermediary, and his main business.

Where relevant, the name and address of the representative of the insurance intermediary established in the retail customer's EEA State of residence.

Where the retail customer's dealings are with any professional other than the insurance intermediary, the name and address of the professional and the capacity in which he is acting with respect to the retail customer.

The insurance intermediary's statutory status (in accordance with GEN 4 Annex 1 (Statutory status disclosure)), and that this can be checked on the FSA's Register by visiting the FSA's website www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234.

A description of the main characteristics of the distance non-investment mediation contract.

The total price to be paid by the retail customer, including all related fees, charges and expenses, and all taxes paid via the insurance intermediary (or, where an exact price cannot be indicated, the basis for the calculation, enabling the retail customer to verify it).

The possibility that other taxes, costs or both may exist which are not paid through or imposed by the insurance intermediary.

Any limitations of the period for which the information provided is valid.

The arrangements for payment and performance.

10.

If such an additional cost is charged, the specific additional cost of using the means of distance communication.

11.

The existence or absence of a right to cancel in accordance with ICOB 6.2.1 R, and where there is such a right:

(a)

the duration of the cancellation period in accordance with ICOB 6.2.2 R;

(b)

the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay, in accordance with ICOB 6.3 to ICOB 6.4;

(c)

the consequences of not exercising the right to cancel; and

(d)

how the right to cancel may be exercised, including the address to which the cancellation notice should be sent.

12.

The minimum duration of the distance non-investment mediation contract.

13.

Information on any rights which the insurance intermediary or the retail customer may have to terminate the contract early or unilaterally, including any penalties imposed by the contract in such cases.

14.

Details of:

(a)

the EEA State or States whose laws are taken by the insurance intermediary as a basis for the establishment of relations with the retail customer prior to the conclusion of the distance non-investment mediation contract;

(b)

any contractual clause on law applicable to the distance non-investment mediation contract, any competent court, or both; and

(c)

the language in which the contract is supplied, and in which the insurance intermediary will communicate during the duration of the distance non-investment mediation contract.

15.

The information contained in ICOB 4.2.8 R (8) and (9) on complaints and compensation that applies in respect of retail customers.

01/11/2007

ICOB 8.3.4

A description of the main characteristics of a distance non-investment mediation contract (ICOB 8.3.3 R(5)) includes the duration for which that service or services will be provided and the type of services offered. Examples include arranging a sale, advising, handling mid-term adjustments and assisting in the making of a claim.

14/01/2005

ICOB 8.3.5

All information provided to a retail customer in accordance with ICOB 8.3.1 R must be in English, unless the customer requests it to be, and the firm agrees to it being, in another language.

14/01/2005

ICOB 8.3.6

The following exemptions from ICOB 8.3.1 R apply:

(1) Exemption: telephone sales

(a) This exemption applies if the service is being provided on the telephone and the retail customer wishes to enter into a distance non-investment mediation contract.
(b) Provided the retail customer gives his explicit consent to receiving only limited information, the insurance intermediary may proceed on the basis of at least the following information:

(i) the identity of the person in contact with the retail customer and his link with the insurance intermediary;
(ii) the information required by ICOB 8.3.3 R(5), (6), (7) and (11); and
(iii) that other information is available on request, and the nature of that information.

If the retail customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the insurance intermediary must prior to the conclusion of the contract provide all of the information required by ICOB 8.3.1 R orally to the retail customer.
(c) Where (b) applies, the insurance intermediary must provide the information required by ICOB 8.3.1 R in a durable medium immediately after the conclusion of the distance non-investment mediation contract.

(2) Exemption: certain other means of distance communication This exemption applies if the contract is concluded at the retail customer's request using a means of distance communication (other than telephone) which does not enable provision of the information referred to in ICOB 8.3.1 R in a durable medium before the conclusion of the contract. In that case, the insurance intermediary does not need to provide the information in ICOB 8.3.1 R before conclusion of the contract but must provide it to the retail customer in a durable medium immediately after the conclusion of the distance non-investment mediation contract.
(3) Exemption: successive operations or separate operations of the same nature under an initial service agreement This exemption applies if the insurance intermediary has an initial service agreement with the retail customer and the contract is in relation to a successive operation or a separate operation of the same nature under that agreement. In this case, the information referred to in ICOB 8.3.1 R applies to the initial service agreement and not to the successive operations or separate operations of the same nature.
(4) Exemption: other successive or separate operations This exemption applies if:

(a) the insurance intermediary has no initial service agreement with the retail customer; and
(b) the insurance intermediary has performed an operation with the retail customer within the last year; and
(c) the distance non-investment mediation contract is in relation to a successive operation or separate operation of the same nature.

01/11/2007

ICOB 8.4

Unsolicited services

14/01/2005

ICOB 8.4.1

(1) Subject to ICOB 8.4.2 R, an insurance intermediary must not:

(a) supply a service to a retail customer without a prior request on his part, when the supply of such a service includes a request for immediate or deferred payment; or
(b) enforce any obligation against a retail customer in the event of unsolicited supplies of such services, the absence of a reply not constituting consent.

(2) Paragraph (1) applies in relation to insurance mediation activities in relation to distance non-investment mediation contracts under an organised distance sales or service-provision scheme run by the firm or by an intermediary, who, for the purpose of that supply, makes exclusive use of one or more means of distance communication up to and including the time at which the services are supplied.

01/11/2007

ICOB 8.4.2

ICOB 8.4.1 R does not apply for a tacit renewal of a distance non-investment mediation contract.

14/01/2005

ICOB 8.5

Cancellation requirements

14/01/2005

ICOB 8.5.1

The provisions of ICOB 6 (Cancellation) apply in respect of a distance non-investment mediation contract with a retail customer as they do in respect of a general insurance contract concluded by distance means, with the amendments listed in ICOB 8.5.2 R.

01/11/2007

ICOB 8.5.2

Table of amended cross-references to rules in ICOB 6. This table belongs to ICOB 8.5.1 R.

Rule or guidance

Reference in rule or guidance

To be read as a reference to:

ICOB 6.1.10 G

ICOB 5.3.12 R

ICOB 8.3.3 R (11)

ICOB 6.2.5 R (3)

ICOB 5.3.4 R, ICOB 5.3.6 R (1) or ICOB 5.3.6 (1) ICOB 5.3.8 R

ICOB 8.3.1 R (1) and ICOB 8.3.1 R (2), ICOB 8.3.6 R (1)(c) and ICOB 8.3.6 R (2)

ICOB 6.2.7 G

ICOB 5.3.4 R, ICOB 5.3.6 R (1) or ICOB 5.3.8 R

ICOB 8.3.1 R (1) and ICOB 8.3.1 R (2), ICOB 8.3.6 R (1)(c) and ICOB 8.3.6 R (2)

ICOB 6.2.8 R

ICOB 5.3.4 R,ICOB 5.3.6 R (1) or ICOB 5.3.8 R

ICOB 8.3.1 R (1) and ICOB 8.3.1 R (2), ICOB 8.3.6 R (1)(c) and ICOB 8.3.6 R (2)

ICOB 8.3.3 R (11)

ICOB 8.3.3 R (11)

14/01/2005

ICOB 8.5.3

The effect of ICOB 8.5.1 R is that, among other things, the retail customer will have a 14 day period within which he may cancel the contract from the day the contract is concluded or the day on which he receives the contractual terms and conditions and information in a durable medium in accordance with ICOB 8.3.1 R, whichever is the later.

14/01/2005

Transitional Provisions and Schedules

ICOB TP 1

Transitional Provisions

ICOB TP 1.1

(1)

(2) Material to which the transitional provision applies

(3)

(4) Transitional provision

(5) Transitional provision: dates in force

(6) Handbook provision: coming into force

Every rule in ICOB unless the context otherwise requires and subject to any more specific transitional provision relating to the matter.

If the application of any provision in ICOB is dependent on the occurrence of a series of events, some of which occur before, and some of which occur on or after 14 January 2005, the provision applies with respect to the events that occur on or after 14 January 2005.

14 January 2005 - 15 July 2005

14 January 2005

For example, if a firm were to advise a customer before 14 January 2005 to buy a non-investment insurance contract, the firm would not be required to comply with the provisions relating to personal recommendations in ICOB 4 if the customer were to buy the non-investment insurance contract on or after 14 January 2005. However, if the firm were to repeat the personal recommendation to the customer on or after 14 January 2005, those provisions in ICOB 4 would apply.

Where a non-investment insurance contract is concluded before 14 January 2005, the cancellation provisions (if any) applying at the date the cancellation period commences apply.

ICOB 4.4

Where, before 14 January 2005, an insurance intermediary makes a personal recommendation to a customer of a specific non-investment insurance contract, or arranges for the customer to enter into a non-investment insurance contract, but the contract is concluded on or after that date, the insurance intermediary will need to provide the customer with a statement of demands and needs in accordance with ICOB 4.4.1 R.

[Deleted]

ICOB 2.2.3 R (1) and ICOB 3.8.1 R (1)

A firm may continue to use stationery and similar materials which refer to its membership of the General Insurance Standards Council (GISC) without being considered to be in breach of ICOB 2.2.3 R (1) (clear, fair and not misleading communication) or ICOB 3.8.1 R (1) (clear, fair and not misleading comparisons).

14 January 2005 - 15 July 2005

14 January 2005

ICOB 5

(1)

ICOB 5.3.1 R to ICOB 5.3.8 R and ICOB 5.4.1 R to ICOB 5.4.9 G do not apply in respect of any non-investment insurance contract concluded before 14 January 2005, provided that the firm follows the requirements in COB 6.8 that would have applied before 14 January 2005 to such a contract before the contract was entered into.

Indefinitely

14 January 2005

(2)

If a non-investment insurance contract is concluded before 14 January 2005 and the customer has not previously received a policy document, the insurer or insurance intermediary (as the case may be) must ensure that the customer is provided with a copy of the policy document in good time prior to the commencement of any renewal of, or mid-term change to, the policy, but in respect of any mid-term change requested by a commercial customer on or before 30 April 2005, the insurer or insurance intermediary (as the case may be) may provide the commercial customer with the policy document promptly after the mid-term change.

ICOB 4.2.4 G (1)

Until 31 May 2005, the reference in ICOB 4.2.4 G to the initial disclosure document set out in ICOB 4 Annex 1 G and the combined initial disclosure document set out in ICOB 4 Annex 2 R includes an initial disclosure document which complies with ICOB 4 Annex 1 G and a combined initial disclosure document which complies with ICOB 4 Annex 2 R in the Insurance: Conduct of Business Sourcebook Instrument 2004 (FSA 2004/06).

14 January 2005 - 31 May 2005

Already in force

ICOB 5.5.5 R (12)

A firm may comply with ICOB 5.5.5 R (12) without including in the policy summary, if it be the case, the fact that there is no compensation scheme.

14 January 2005 to 31 July 2005

14 January 2005

ICOB 4.1.4 R and ICOB 4.4.2R (3)

To the extent that an insurer need not comply with provisions of ICOB 4 when dealing with a commercial customer, it is not responsible for ensuring that its appointed representative appointed prior to 6 March 2006 complies with those provisions.

6 March 2006 to 6 July 2006

6 March 2006

ICOB 4 Annex 1 G and ICOB 4 Annex 2 R

Key facts logo
A firm may continue to use a keyfacts logo which is not accompanied by a regulatory mark (®).

From 6 November 2006 to 6 November 2007

ICOB 1.2.17 R

A firm is not required to make, and retain a record of, the election to comply with the Conduct of Business sourcebook.

6 June 2007 to 5 June 2008

6 June 2007

ICOB 7.6.8 R to ICOB 7.6.11 G

The amendments to these provisions made by the Fifth Motor Insurance Directive Instrument 2007 do not apply in relation to claims received by a motor vehicle liability insurer or a claims representative on or before 10 June 2007.

From 11 June 2007

11 June 2007

11/06/2007

ICOB Sch 1

Record Keeping Requirements

14/01/2005

ICOB Sch 1.1

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record-keeping requirements.

14/01/2005

ICOB Sch 1.2

It is not a complete statement of those requirements and should not be relied on as if it were

14/01/2005

ICOB Sch 1.3

Handbook reference

Subject of record

Contents of record

When records must be made

Retention period

ICOB 1.2.17R (2)

Record of election to comply with Conduct of Business sourcebook rules for pure protection contracts (including amendment or reversal of election)

Date of election and precise description of parts of the firm's business that will comply with Conduct of Business sourcebook provisions

Not specified

Indefinitely

ICOB 4.4.7 R

Personal recommendation to customer

Explanation of why the personal recommendation is suitable for the customer's demands and needs

The date on which personal recommendation is made

Three years

ICOB 5.7.1 R

Policy summary

As set out in ICOB 5.5.5 R

The date on which policy summary is provided to the customer

Three years

ICOB 5.7.1 R

Policy Document

All the contractual terms and conditions

The date on which policy document is provided to the customer

Three years

ICOB 7.7.1 R

Claims information

Details of claim, the date on which the claim was settled or rejected and details of rejection including information relevant to the basis for settling or rejecting the claim

The date on which claim is settled or rejected

Three years

06/06/2007

ICOB Sch 2

Notification Requirements

14/01/2005

ICOB Sch 2.1

There are no notification requirements in ICOB.

14/01/2005

ICOB Sch 3

Fees and other required payments

14/01/2005

ICOB Sch 3.1

There are no requirements for fees or other payments in ICOB.

14/01/2005

ICOB Sch 4

Powers exercised

14/01/2005

ICOB Sch 4.1

The following powers and related provisions in or under the Act have been exercised by the FSA to make the rules in ICOB:

section 138 (General rule-making power)

section 139(4) (Miscellaneous ancillary matters)

section 145 (Financial promotion rules)

section 149 (Evidential provisions)

section 156 (General supplementary powers)

regulation 2 of the Financial Services and Markets Act 2000 (Fourth Motor Insurance Directive) Regulations 2002 (SI 2002/2706).

The following powers in the Act have been exercised by the FSA to give the guidance in ICOB:

section 157(1) (Guidance).

14/01/2005

ICOB Sch 5

Rights of action for damages

14/01/2005

ICOB Sch 5.1

The table below sets out the rules in ICOB contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

14/01/2005

ICOB Sch 5.2

If a "yes" appears in the column headed "For private person?", the rule may be actionable by a private person under section 150 (or in certain circumstances, his fiduciary or representative; see article 6(2) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001/2256)). A "yes" in the column headed "Removed?" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

14/01/2005

ICOB Sch 5.3

The column headed "For other person?" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and 6(3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

14/01/2005

ICOB Sch 5.4

Rule

Right of action under section 150

For private person?

Removed?

For other person?

All rules in ICOB with the status letter "E"

Any rule in ICOB which prohibits an authorised person from seeking to make provision excluding or restricting any duty or liability

Yes

Any other person

ICOB 7.6.9 R

Yes

Any other person

All other rules in ICOB

Yes

14/01/2005

ICOB Sch 6

Rules that can be waived

14/01/2005

ICOB Sch 6.1

The rules in ICOB may be waived by the FSA under section 148 of the Act (Modification or waiver of rules). However, if the rules incorporate requirements laid down in European directives, it will not be possible for the FSA to grant a waiver that would be incompatible with the United Kingdom's responsibilities under those directives. It therefore follows that if a rule in ICOB contains provisions which derive partly from a directive, and partly not, the FSA will be able to consider a waiver of the latter requirements only, unless the directive provisions are optional rather than mandatory.

14/01/2005