Insurance Brokers
FCA Authorisation
Expert regulatory support for insurance brokers, intermediaries, and MGAs seeking FCA authorisation for insurance distribution activities.
Insurance Distribution Regulation
Insurance brokers facilitate the distribution of general and life insurance products, acting as intermediaries between clients and insurers.
The Insurance Distribution Directive (IDD) sets comprehensive requirements for product governance, customer information, and professional standards.
FCA authorisation requires demonstrating appropriate qualifications, PI insurance, complaints handling, and consumer duty compliance.
Typical Services
- General insurance broking (commercial and personal)
- Life insurance and protection advice
- Managing general agent (MGA) activities
- Risk management and claims support
How We Support Insurance Broking Firms
- Perimeter scoping across arranging, advising, administering and delegated authority
- Client money decision and CASS 5 operating model design
- Fair value methodology built around your actual panel and remuneration
- Panel and agency agreement review, including claims data access rights
- Capital planning and professional indemnity cover
- Senior Manager identification and recruitment
- Complete Connect application submission
- ICOBS compliance manual covering disclosure, demands and needs, and claims
- Demands and needs process design and sales file templates
- Product governance and fair value assessment documentation
- Appointed representative and introducer oversight framework
- Complaints handling and dispute resolution
- FCA query management and responses
- Senior Manager interview preparation
- Sales file review against the submitted demands and needs framework
- Fair value assessment refresh and board reporting
- Conditional approval requirements fulfilment
- Ongoing regulatory support and updates
Key Regulatory Requirements
Professional Qualifications
- CII Level 4 Diploma (or equivalent)
- Appropriate technical knowledge
- Continuing professional development
- Competence assessment framework
Professional Indemnity Insurance
- Minimum £1.6m per claim (IDD firms)
- Aggregate cover considerations
- FCA-compliant policy wording
- Annual renewal and documentation
Consumer Duty Compliance
- Fair value assessments
- Product governance framework
- Vulnerable customer support
- Outcomes monitoring
Financial Resources
- Base capital: £20,000 (MIPRU firms)
- Professional indemnity insurance
- Adequate working capital
- Financial projections
Required FCA Permissions
Insurance broking permissions turn on what the firm does with the risk, not only on which products it sells.
Advising on Insurance
Giving a personal recommendation on a general insurance or pure protection contract, as distinct from merely providing product information.
- Personal recommendation on file
- Fair analysis basis disclosed
- Demands and needs consistency
- Adviser competence records
Arranging Insurance Contracts
Putting cover in place for a client, the core broking permission and the point at which the ICOBS distribution rules bite.
- Demands and needs statement per sale
- IPID and pre-contract disclosure
- Status disclosure under ICOBS 4
- Panel and market access records
Introducing and Referral Arrangements
Applies where the firm generates or passes on insurance business rather than concluding it, including aggregator and introducer models.
- Introducer and aggregator due diligence
- Clarity on where advice is given
- Commission arrangement transparency
- Conduct standards for the role in the chain
Policy Administration and Claims Handling
Needed where the firm services the policy after inception, covering mid-term adjustments, renewals and claims advocacy rather than only placing the risk.
- ICOBS 8 claims handling standards
- Prompt progression and claimant guidance
- Vulnerable claimant support
- Claims MI on acceptance, decline and settlement
Holding Client Money (CASS 5)
Applies where the firm receives premiums or claims monies in the course of arranging or administering insurance contracts.
- CASS 5 segregation and reconciliation
- Statutory trust arrangements
- Bank acknowledgement letters
- CASS resolution pack kept current
Permissions & scope
Which regulated activities the firm will carry on, and the exact permissions that follow from them. Everything downstream is scoped to this, so a permission asked for loosely is a business plan and a set of controls built against the wrong thing.
Business model
What the firm does, who for, and how it earns. The FCA tests whether the model is viable and whether the permissions being requested actually match it, rather than reading the two documents separately.
Governance & SM&CR
Who is accountable for what, and whether they are fit and proper for it. Senior manager responsibilities have to be mapped to named people and evidenced, not asserted in a paragraph.
Policies & controls
The procedures that make the model work in practice, and evidence they are followed rather than filed. A policy the firm cannot show operating is the most common gap at the gateway.
Financial resources
Capital, projections and an orderly wind-down. The figures have to agree with the business model rather than sit beside it, and the wind-down plan has to be costed.
Common Authorisation Challenges
Fair value, commission and client money are where insurance broking applications most often stall.
Fair Value Where You Do Not Control the Product
The FCA expects a distributor to evidence fair value for its own link in the chain even though the insurer sets the premium and the cover. We help brokers assess whether their commission and fees are justified by the services actually delivered, document the assessment, and set out what they will do when a product on the panel does not deliver value.
Justifying Commission Levels
Commission to premium ratios are a live supervisory question for general insurance intermediaries, and the FCA's 2024 Dear CEO letter to GI intermediaries required firms to consider whether remuneration was proportionate to the service provided. We help applicants map the services they deliver against the remuneration they take, so the business model survives scrutiny rather than being renegotiated after authorisation. Disclosing commission is not the same as showing it represents fair value.
Demands and Needs That Are Actually Individualised
A demands and needs statement that could apply to any customer is evidence of a process failure, and it is the most common ICOBS defect we see. We design sales processes that capture real customer information and produce a statement that could only have been written for that customer, with the file evidence to prove it.
Add-Ons and Getting Claims Data From Your Partners
Add-on products such as GAP and excess protection carry the sector's weakest value evidence, and a broker cannot assess them without claims ratio and decline rate data from the product partner. The FCA treats an inability to obtain claims data as a red flag for the distribution relationship. We help firms specify that data in their agency agreements and build the analysis expected of them.
Client Money and CASS 5 Readiness
Brokers that collect premiums fall within the insurance client money rules, and the controls behind them, reconciliation, segregation and a maintained resolution pack, are assessed at the gateway. We help firms decide whether they need to hold client money at all, and build the controls where they do.
Premium Finance and Total Cost to the Customer
Where the premium is spread over instalments the FCA looks at whether the added cost is matched by benefit, and effective rates can be high relative to that benefit. We help brokers evidence the total cost the customer bears across premium, broker fees, mid-term adjustment and cancellation charges and finance, and identify where the arrangement will not stand up. Where the customer is introduced to a separate premium finance provider, the firm may also be credit broking and need its own consumer credit permission.
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ICOBS fair value, demands-and-needs and product governance support for insurance brokers.
Learn more →Ready to Get Authorised?
Speak with our insurance broking regulatory specialists about fair value, client money and getting your permissions right first time.
Phone: 0330 133 0811
Email: contact@memaconsultants.com