Key talking points in FCA's CP25/12: Reforms to streamline UK insurance regulation

The UK is a world leader and a global hub for commercial insurance, providing expertise in underwriting complex and specialty risks, and handling risks from all over the world. At the same time, the UK retail insurance market continuously provides peace of mind for consumers across the country.

The FCA want to ensure that the rules continue to work well for the different types of products, customers, manufacturing and distribution arrangements in the UK insurance market.

On 14^th May 2025, the FCA published a consultation paper entitled “CP25/12 Simplifying the insurance rules: Proposed amendments following DP 24/1 and discussion on further changes for insurance and funeral plans” in which the FCA outlines proposals to benefit the insurance market more widely, including:

• No longer requiring firms to review the value of their product at least every 12 months. Instead, firms would use the risks and characteristics of each product to decide how often they review them.
• Giving firms flexibility to appoint one lead insurer to comply with its rules in instances where more than one party is involved in designing the insurance product.
• Broadening the scope of bespoke contract exclusions and making them easier for all insurers and brokers to use. Bespoke contracts are built to suit one customer upon that customer’s request, which means they automatically have the protections product governance rules provide.
• Getting rid of duplicative annual reporting and employer’s liability notification requirements.
• Removing the specified minimum hours of training and development required for insurance and funeral plan employees.

What does this mean for firms and consumers?

The regulator plans to strip outdated or duplicated requirements from its insurance rulebook, having asked what improvements it could make. The changes could support lower costs and wider access for the businesses and consumers who rely on insurance to manage risk, while maintaining appropriate levels of protection.

While it is easy to focus on the removal of reporting – always a good thing! – it is easy to miss the last proposal. So, lets read that again: the FCA is proposing to remove the specified minimum hours of training and development required for insurance and funeral plan employees. Hang on, no specified minimum hours of training are required for insurance and funeral plan firms? What does that mean?

This is an interesting one as the current CPD minimum training and development requirement is 15 hours, or 35 hours for advisers. And there are many suppliers of CPD training and eLearning who help regulated firms ensure they have a training resource to support the necessary requirements. Does this now mean those companies should shut up shop? Are they now surplus to requirements? Is ongoing training needed?

While I am sure the removal of minimum hours of training and development will be a reason to celebrate for some firms, I think we can safely say that the FCA will still expect firms to have trained and competent employees. And the only way to maintain ongoing competency is via training.

The likelihood is the FCA will expect firms to adopt ‘good practice’ and maintain training and development programmes in order to evidence the competency of their employees. And evidence will be key because “if its not written down, it did not happen.”

As a result, I suspect that regulated firms, and outsourced providers of training and compliance support, will still be expected to maintain a training and development programme to ensure 1) it has competent employees, 2) this competency is maintained, and 3) this is evidenced.

In CP25/12, the FCA is also proposing to create a new definition to identify large commercial insurance customers who should not be captured by its conduct rules. The FCA state this would ease the burden on firms insuring larger businesses that can manage risks independently, while protecting smaller commercial customers.

The consultation comes following its commitment to withdraw over 100 pages of outdated guidance in a bid to streamline its rules, reduce burdens on businesses, and improve outcomes for consumers after the introduction of the Consumer Duty. The FCA is asking for comments on these proposals by 2 July 2025.

How can Cosegic help?

At Cosegic, we can help firms maintain their ongoing competency regardless of the minimum hours’ requirement. We offer two options, a market-leading e-learning platform Cosegic Portal and bespoke classroom face to face training and workshops for firms across all sectors to support the understanding of core areas of regulation and to help firms meet their ongoing training and competency. This allows firms to adhere to the FCA's individual training requirements under SMCR. For further details and information, contact us below.

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