The Financial Conduct Authority (FCA) has published PS25/21: Simplifying the insurance rules, finalising a series of reforms aimed at reducing unnecessary complexity in the regulatory framework for insurers, intermediaries and firms providing funeral plans, while maintaining appropriate protections for consumers. These reforms respond to feedback received on Consultation Paper CP25/21 and align with the FCA’s broader agenda to modernise insurance regulation, particularly in the context of the Consumer Duty and wider market developments.
Key Reforms Under PS25/21:
- Clarified Scope for Commercial InsuranceRegulations:The FCA has refined the rules that determine which conduct requirements apply to commercial insurance customers, with a focus on aligning regulatory protections with the needs of different customer segments. The adjustment makes clear distinctions between larger commercial customers and smaller enterprises, ensuring that protections align with risk and customer sophistication.
- Lead Firm Responsibility for Product Governance:Firms may nowdesignate a single ‘lead firm’ to assume responsibility for product design and approval. This reform reflects real-world distribution chains and reduces duplication of oversight responsibilities, particularly in multi-firm arrangements.
- Broader Bespoke Contracts Exclusion:The definition of ‘bespoke contracts’ has been broadened and clarified, offering greater flexibility for firms dealing with tailor-made corporate or specialty products that fall outside standardised product governance models under PROD 4.2 of the FCA Handbook.
- Flexible Product Review Frequency:The requirement to conduct product reviews at fixed 12-month intervals has been removed. Firms may nowdetermine review frequency based on product risk and complexity, provided this is clearly documented and justifiable, in alignment with PROD 4.2.34R.
- Removal of NotificationandReporting for Employers’ Liability Insurance: Outdated notification and reporting requirements relating to Employers’ Liability insurance have been removed, easing administrative burdens without compromising key protections.
- Removal of MinimumCPD Requirement: The previously mandated minimum of 15 hours’ Continuing Professional Development (CPD) for employees in the insurance sector has been removed. While the FCA no longer sets a numeric threshold, firms remain accountable for ensuring staff are competent and capable, under SYSC 5.1.5R.
Who This Applies To:
PS25/21 applies to a broad range of insurance market participants, including:
- Insurers and Lloyd’s managing agents
- Insurance intermediaries
- Firms that provide funeral plans
- Industry groups and consumer bodies engaged with insurance regulation.
Implementation and What Firms Should Do
Most of the new rules take effect immediately on publication of PS25/21. Firms should:
- Review governance frameworks for product design and approval.
- Reassess how product reviews are scoped and scheduled.
- Update training and competence policies to reflect greater flexibility.
- Confirm which conduct obligations continue to apply to different customer segments, including commercial clients.
- Ensure internal reporting and notification processes align with the updated Handbook provisions.
Early and proactive implementation will allow firms to capitalise on the regulatory flexibility introduced, while maintaining robust consumer outcomes in line with Principle 12 and the Consumer Duty.
FCA’s Broader Objectives and Next Steps
PS25/21 is designed to streamline requirements to make them more proportionate and flexible, particularly for firms serving commercial customers and those operating in international markets. Many of the rule changes provide optionality, giving firms greater autonomy to structure their governance and compliance activities in ways that fit their business models while continuing to protect customers.
Alongside this Policy Statement, the FCA has signalled further work in 2026 and beyond, including consultation on conduct rules for non-UK business, clarification of core definitions across the Handbook, and potential amendments to reporting requirements.
How Complyport Can Help?
Complyport supports firms in managing these reforms outlined in PS25/21 changes with a structured, defensible and efficient approach to implementation. Our experts help firms interpret the updates, embed revised processes and strengthen governance to ensure compliance remains both effective and proportionate.
We support firms by:
- Interpreting Rule Changes and Optimising Oversight Frameworks:We help firms understand the practical implications of PS25/21,including optionality around lead-firm product governance, updated commercial customer scope and flexible product review frequencies. By mapping your current processes against the revised requirements, we ensure your governance approach is aligned, efficient and tailored to your operational model.
- Strengthening Governance, Policies and Documentation:We help update product governance policies (in line withPROD requirements), clarify oversight responsibilities and enhance documentation standards to ensure regulatory compliance is well evidenced and auditable.
- Training and Advisory Support:To support effective implementation, we deliver practical training on the new rules, including changes to the bespokecontracts’ exclusion and governance for complex distribution chains. Our tailored sessions equip teams with the knowledge needed to manage regulatory expectations confidently and maintain high standards under the new regime.
- Ongoing Monitoring and Risk Mitigation:We help firms implement proportionate monitoring systems to ensure ongoing compliance with Consumer Duty expectations and product governance standards. This reduces regulatory risk and enhances senior management oversight.
Contact Us
To understand how PS25/21 may impact your business or to explore how Complyport can support implementation, strengthen governance and streamline your compliance processes – get in touch to arrange a discussion with one of our Subject Matter Experts.
Ask ViCA, your Virtual Compliance Assistant. Claim your complimentary 20 queries today: https://vica.chat
