Insurance Distribution Directive guidance for law firms revealed in tmgroup webinar
tmgroup discuss what is revealed about the Insurance Distribution Directive guidance for law firms in the latest webinar.
Click here to watch the episode!
During the process of conveyancing, many firms engage in insurance distribution activities, such as arranging insurance for defective titles. These fall under regulated financial services. Adhering to legal restrictions and regulatory obligations is paramount, as breaches can lead to criminal offences and regulatory sanctions.
To assist law firms in understanding and complying with these duties, tmgroup, a leading provider of property data and technology solutions, has partnered with CLSQ for an informative webinar examining the Insurance Distribution Directive requirements.
We take a look at some of the key discussion points from the session:
Insurance Distribution activities
The Insurance Distribution Directive (IDD), a piece of European Union legislation, is designed to improve consumer protection in insurance product purchases, and is implemented and supervised by the Financial Conduct Authority (FCA).
The IDD defines insurance distribution as “the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts of insurance, of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim”.
It is these activities which are subject to regulation.
Navigating the legal framework
The Financial Services and Markets Act 2000 (FSMA) is the principal piece of financial services legislation, which mandates that firms conducting financial activities must be authorised by the FCA or PRA, unless exempted.
Providing financial services without being authorised or exempt is a criminal offence. Law firms can leverage the FSMA Part 20 Exemption to conduct insurance distribution activities under the supervision of regulatory bodies, such as the SRA or CLC.
It is therefore important that law firms understand the role of their own regulatory body in supervising and enforcing the correct use of the exemption.
Client care obligations
The SRA requires that firms engaging in insurance distribution activities must comply with additional duties outlined in Part 3 of the Conduct of Business Rules.
This includes communicating information in a clear, fair and non-misleading manner.
Conveyancers must also provide clients with comprehensive information regarding their status as insurance intermediaries, their representation roles, any voting rights or ownership stakes in insurers, and the scope of services provided.
Jonathan Stebbings, Chief Commercial Officer at tmgroup, explains the platform’s role in facilitating indemnity insurance:
“FCA registered firms can access legal indemnity insurance quotes and policies through tmgroup’s service platform, powered by CLSQ’s range of off-the-shelf and bespoke insurance products.
“For added reassurance, each policy includes Demands and Needs statements and an Insurance Product Information Document.
“Clients can also access IDD related learning resources to ensure staff have the necessary knowledge in providing these services.
“Through our strategic partnerships and comprehensive solutions, tmgroup empowers law firms in meeting compliance requirements and delivering secure services.”
Navigating the intricacies of the Insurance Distribution Directive requires a thorough understanding and correct execution of the surrounding regulatory frameworks. To explore SRA guidance on the FCA regulations and requirements in greater detail, watch the full webinar episode, Insurance Distribution Directive – Guidance for Law Firms.
Visit tmgroup’s website for more information on risk management solutions or to explore other webinars in the series.
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