UK: Corporate Insurance Regulatory Update - August 2011


GC11/15: Proposed guidance on Financial Promotions – Prominence

8 July 2011

The FSA is consulting on proposed guidance on the concept of prominence in financial promotions. This concept is important as prominence goes to ensuring that a financial promotion is clear, fair and not misleading and as such it is engrained in conduct of business requirements relating to financial promotions.

The FSA is proposing this guidance in order to clarify the interpretation of prominence in a response to the inconsistent standards that the FSA has identified whilst monitoring financial promotions by firms. The guidance concerns COBS 4, MCOB 3, ICOBS 2 and BCOBS 2 and will be most relevant to persons approving financial promotions.

The guidance emphasises that the assessment of prominence can be subjective and therefore requires firms to take into account the needs of the average recipient as well as the nature of the product or business. When assessing prominence, firms should pay particular regard to the positioning of text, background, colour and type size.

Examples of good practice include

  • important information, statements or warnings are shown using clear and bold type styles across neutral backgrounds; and
  • both the benefits and drawbacks of a product are balanced through equally prominent feature statements.

Examples of poor practice include:

  • obscuring of important information; and
  • diminishing the impact of statements through use of location, small font size, type styles or patterned backgrounds.

The concept of prominence does have special importance in relation to risk statements. By way of example, good practice may involve risk statements being:

  • featured prominently and within their own border;
  • stated within the main body of the advertisement ahead of the 'small print';
  • featured on the website landing page which the customer first arrives at;
  • fixed on the website even when the customer scrolls up and down or the television screen throughout the commercial; and
  • repeated on linked pages further into the website product chain.

The full text of the guidance that the FSA is consulting on can be found at:

GC11/18: Proposed guidance on Liquidity swaps

21 July 2011

GC11/18 proposes guidance on four key issues: conflicts of interest in intra-group transactions, using own-issued or own-originated securities as collateral (wrong-way risk), the relationship between micro-prudential and macro-prudential risks (limit structures) and Pillar 2 considerations and capital.

The FSA is proposing this guidance because it has noticed that banks are increasingly entering into liquidity swaps in order to access liquidity contained within asset portfolios held by insurers.

The proposed guidance concerns the following FSA Handbook rules:

  • GENPRU 1.2.26R and 1.2.30R; and
  • INSPRU 3.2.36R, 3.2.38R, 3.2.40R and 3.2.41R.

The FSA invites responses, which should be provided by 21 September 2011.

A copy of the guidance consultation can be found at:


Handbook Release 115

20 July 2011

The Release contains updates to the FSA Handbook which came into force between 7 June 2011 and 6 July 2011.

The updated sections are as follows:

  • Glossary;
  • Senior Management Arrangements, Systems and Controls;
  • Training and Competence;
  • General Provisions;
  • Fees Manual;
  • General Prudential Sourcebook;
  • Prudential Sourcebook for UCITS Firms;
  • Conduct of Business;
  • Supervision;
  • Decision Procedure and Penalties Manual;
  • Dispute Resolution: Complaints;
  • Compensation Sourcebook;
  • Disclosure and Transparency Rules;
  • Collective Investment Schemes; and
  • Regulated Covered Bonds

A full copy of the release can be found at:


Claims Management Companies and Financial Services Complaints

19 July 2011

The FSA, FOS, FSCS and the Claims Management Regulator (CMR) have produced a joint note for financial services businesses and consumers in order to better explain the role of Claims Management Companies (CMC) by whom a consumer may elect to be represented in a financial services complaint.

The note includes:

  • Information relating to the role of the FSA, FOS and FSCS in regard to CMCs and the complaints handling process;
  • General information concerning CMCs including structure, service and cost;
  • More specific information regarding the regulations imposed by the CMR on CMCs;
  • Assistance for consumers who want to make a complaint against a CMC, including a direct website link and phone number; and
  • General information for financial services firms receiving complaints from CMCs.

Additionally the note stresses that the involvement of a CMC, as opposed to a consumer who complains directly, will have no bearing upon any decisions that the FOS and FSCS make in regards to consumer complaints.

A copy of the note can be found at:


EIOPA announces the results of its second European insurance stress test

4 July 2011

From March to May this year EIOPA carried out stress tests on insurers in relation to market, credit and insurance-related risks to assess whether they will be able to meet the incoming Solvency II Minimum Capital Requirements (MCR).

The published results indicate that European insurance market would generally remain robust in the occurrence of potential future shocks as tested. More specifically, 90% of the participating groups and companies would comply with the MCR under the most adverse scenario.

An additional test was run to test exposure to an adverse scenario in relation to sovereign bond yields. The test showed that 5% of participants would fail to meet the MCR under the adverse scenario.

The results represent approximately 60% of European insurers and reinsurers and over 50% of the insurers and reinsurers of each country.

The results will be discussed with insurers and reinsurers and they will also be used to help formulate individual plans and strategies for the implementation of Solvency II.

A copy of the press release can be found here:

A copy of the EIOPA presentation can be found here:


IAIS Concept Paper: Common Framework for the Supervision of Internationally Active Insurance Groups

6 July 2011

The International Association of Insurance Supervisors (IAIS) has published for comment a Concept Paper in relation to the IAIS's development of a Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame).

ComFrame builds upon the IAIS's agenda of strengthening supervision and stability of internationally active insurance groups (IAIGs) at the group level, and has been developed around the best practice of IAIGs. The IAIS intends to continue to develop ComFrame over a three year period, with a target date of 1 July 2013.

ComFrame is intended to enhance harmonisation of international regulatory and supervisory approaches, create a forum and means for integration and cooperation between various international supervisors and to increase the efficacy of group-wide supervision on a global scale, taking into account the way in which the industry operates. It will assist international supervisors to address and assess risks applicable to IAIGs, whether current or arising from time to time and will facilitate the sharing of information between supervisors.

Subsequent consultations will follow in relation to particular elements of ComFrame.

A copy of the concept paper is available at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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