United Kingdom: the FCA simplifies rules but requires brokers to demonstrate fair value

In 2025–2026 the UK regulator, the Financial Conduct Authority (FCA), is doing two things at once: removing some of the formal requirements on the insurance market and tightening scrutiny of whether customers receive fair value for their money. For brokers, this means less paperwork but greater responsibility for customer outcomes.

Consumer Duty and fair value assessment

The Consumer Duty has been in force since 2023 and requires firms to deliver good outcomes for retail customers. Together with the PROD 4 product governance rules, it requires insurers and distributors to check whether the price of a product, including intermediary remuneration, is consistent with the benefit to the customer. In February 2026 the FCA replaced more than 40 portfolio letters with an annual Regulatory Priorities report; in the insurance report, the regulator explicitly calls on firms to continue fair value assessments and to fix anything that does not provide customers with fair value.

Results of three reviews

• Premium finance. On 3 February 2026 the FCA published the final report of its market study. In 2023, 48% of motor and home insurance policies were paid for in instalments. There will be no market-wide measures (a cap on rates, a mandatory zero rate or a ban on commissions). At the same time, brokers' premium finance rates turned out to be on average about 3 p.p. higher than insurers', and the regulator will deal with individual firms through supervision. According to the FCA, the reduction in the cost of premium finance since 2022 saves consumers around £157 million a year.
• GAP insurance. Following the FCA's intervention in 2023–2024, when insurers paused sales, the share of premium returned to customers as claims payouts on standalone GAP policies rose from 7% in 2022 to 53% in 2025 (value measures data published in July 2026). The regulator cautions that these figures should be used with care for now. For 2026 the FCA has planned a consultation on simplifying the specific rules for GAP.
• Life protection and intermediary remuneration. On 21 September 2026 the final report on the pure protection market was published. The FCA found no grounds for market-wide intervention in the commission structure, but pointed to a practice among some intermediaries: arranging new policies to earn repeat commission after the clawback period ends. These practices will be monitored. In addition, in its priorities report the FCA announced that from Q2 2026 it will extend its review of delegated authority and remuneration arrangements where claims handling is outsourced.

Simplifying the rules for the distribution chain

Policy Statement PS25/21 of 9 December 2025 came into force on the day of publication. It split the concept of “large risks” into “specialist risks” and “large commercial customers”: ICOBS, PROD and the Consumer Duty do not apply to them. The mandatory annual product review (its frequency is now determined by the level of risk) and the requirement of 15 hours of professional development a year have been abolished, but the competence requirement has been retained. The right to appoint a “lead firm” when a product is co-manufactured was given to insurers, but not to intermediaries, including MGAs.

On 29 June 2026 the FCA put consultation CP26/22 out for discussion. It proposes applying ICOBS and PROD 4 only where there is a clear UK connection, removing some mandatory disclosures, expanding digital means of providing information and converting the minimum limits of intermediaries' professional indemnity insurance from euros into pounds. The comment period closed on 19 September 2026; the final rules have not yet been adopted.

Lloyd's and the London market

In 2024 the London market wrote around USD 187 billion in gross premiums, 17% more than in 2022. In September 2025 Lloyd's acknowledged that the migration of the market to a new platform under the Blueprint Two programme would not be completed before 2028. In March 2026, together with its annual report, Lloyd's announced a new strategy and the abandonment of part of the programme's original concept: instead of a single mandatory platform, the focus is on common data standards and interoperability of solutions.

What this means for brokers

• The regulator is removing formalities, but not responsibility: commissions, premium finance and add-on products are assessed by their value to the customer.
• A high commission is not prohibited in itself, but you need to be able to justify it with data on claims payouts and the product's benefits.
• The regulator regards re-arranging policies to earn repeat commission as a risk signal. For Kazakhstan's brokers, the British experience is useful as a benchmark for internal rules.
• Digitalisation of the market is happening from the bottom up: it pays more to invest in your own data and integrations than to wait for a single industry platform.