Regulatory framework and conduct of business
Regulatory architecture
The PRA regulates prudential soundness of insurers; the FCA regulates conduct and market behaviour. Both derive powers from FSMA 2000. Insurers and intermediaries must be authorised, satisfy threshold conditions and comply with the FCA Handbook. The Senior Managers and Certification Regime allocates clear responsibilities. Key conduct modules include PRIN (Principles for Businesses), ICOBS (insurance conduct), SYSC (systems and controls) and DISP (complaints).
Treating Customers Fairly and the Consumer Duty
TCF is the older outcomes-based framework: consumers should be confident they are dealing with firms where fair treatment is central; products and services are designed for their needs; clear information before, during and after sale; suitable advice; and no unreasonable post-sale barriers. The Consumer Duty (in force since 2023) raises this to a higher standard for retail customers: the consumer principle (act to deliver good outcomes), cross-cutting rules (act in good faith, avoid foreseeable harm, enable and support customers to pursue their financial objectives) and four outcomes: products and services, price and value, consumer understanding, consumer support.
ICOBS in practice
For non-investment insurance, ICOBS requires demands-and-needs assessment, status disclosure, fair presentation of information, proper claims handling and complaints handling. A customer must be told about cancellation rights where applicable, and complaints must be dealt with within the DISP time limits; if not resolved, the customer can go to the Financial Ombudsman Service.
Worked example
An insurer renews household policies with a 'loyalty' price that is much higher than the new-business price, without any fair-value assessment. The Consumer Duty price-and-value outcome requires the firm to assess whether the product provides fair value, taking account of the total price and benefits. If it cannot show fair value, it must remediate the pricing and evidence the change. The issue is not merely whether the customer could switch; it is whether the firm's own conduct delivers fair value.
Traps
Do not describe TCF as a customer-service slogan; it is an outcomes framework. Do not attribute conduct rules to the PRA. Do not assume Consumer Duty applies only to new sales: it covers existing and closed products for retail customers, within the transition timetable. Do not confuse the FOS with the FCA: the FOS resolves individual complaints, the FCA supervises and can enforce.