FCA Handbook - ICOBS 1 Annex 1 Application (see ICOBS 1.1.2 R)

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ICOBS 1 Annex 1 Application (see ICOBS 1.1.2 R)

Part 1: Who?
Modifications to the general application rule according to type of firm
1	Third party processors
1.1	R	(1)	This rule applies where a firm (or its appointed representative) ("A") has outsourced insurance distribution activities to a third party processor.
		(2)	Any rule in this sourcebook which requires the third party processor, when acting as such, to disclose its identity to a customer must be read as applying to the third party processor only to the extent that it applies to A and as requiring disclosure of A’s identity.
1.2	G	(1)	The disclosure required of the third party processor under ICOBS 4.3.-7R can be made without having to disclose the identity of the third party processor to the customer and therefore without breaching paragraph 1.1R(2) above.
2	Managing agents
2.1	R	(1)	References to an insurer(including within the reference to insurance distributor) apply equally to a managing agent unless the context requires otherwise.
		(2)	A managing agent must give effect to the policy that a consumer must, where required by this sourcebook, be offered cancellation rights.
		(3)	References to managing agents in this sourcebook relate to their functions in managing the obligations of a member in his capacity as such.
3	Authorised professional firms
3.1	R	This sourcebook (except for ICOBS 4.6) does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for:
		(1)	the provisions on communications to clients and financial promotions (see ICOBS 2.2);
		(2)	the e-commerce provisions (ICOBS 3.2);
		(3)	general information disclosure requirements in relation to complaints procedures (see ICOBS 4.1); and
		(4)	the UK provisions which implemented articles 1(4), 17, 18, 19, 20, 23, and 24 of the IDD (see ICOBS 2.2.2R (communication to customers and financial promotions), ICOBS 2.2.2AR (marketing communications), ICOBS 2.5.-1R (the customer’s best interests rule), ICOBS 2.6 (Distribution of connected contracts through exempt persons), ICOBS 4.1 (Information about the firm, its services and remuneration), ICOBS 4.1A (Means of communicating to customers), ICOBS 4.3 (remuneration disclosure), ICOBS 5.2 (Demands and needs), ICOBS 5.3.3R (Advice on the basis of a fair analysis), ICOBS 5.3.4R (Personalised explanation), ICOBS 6A.1.4R (Ensuring the customer can make an informed decision) and ICOBS 6A.3 (Cross-selling)), except to the extent that the firm is subject to equivalent rules of its designated professional body approved by the FCA.
3.2	G	Compliance with the UK provisions which implemented the Distance Marketing Directive is dealt with in the Professional Firms sourcebook (see PROF 5.4).
4	Appointed representatives
4.1	R	(1)	An insurer must ensure that its appointed representative complies with this sourcebook as it applies to an insurance intermediary.
		(2)	However, if the appointed representative is acting as the insurer's third party processor then:
			(a)	this rule is subject to the third party processors rule (see paragraph 1.1R); and
			(b)	the insurer is not required to ensure that the appointed representative complies with the rules in this sourcebook on commission disclosure (see ICOBS 4.4).
4.2	G	The cancellation requirements in chapter 7 do not apply to a distance contract entered into by an appointed representative to provide distribution services. Regulations 9 (Right to cancel) to 13 (Payment for services provided before cancellation) of the Distance Marketing Regulations apply instead.
5	Service companies
5.1	R	This sourcebook does not apply to a service company, except for the provisions on communications to clients and financial promotions (see ICOBS 2.2).
6	Lloyd’s
		This sourcebook does not apply to the Society.
7	Gibraltar-based firms and TP firms
7.1	R	(1)	In addition to the general application rule in ICOBS 1.1.1R, the provisions in (2) also apply to:
			(a)	TP firms and Gibraltar-based firms which carry on business from an establishment in the United Kingdom; or
			(b)	(i)	TP firms and Gibraltar-based firms that provide services from an establishment outside the United Kingdom; or
				(ii)	firms operating from an establishment overseas; and
				with a customer in the United Kingdom.
		(2)	The provisions specified for the purposes of (1) are:
			(a)	ICOBS 6.1.7-AG , ICOBS 6.5.1AG and ICOBS 6A.4 (Travel insurance and medical conditions) (except for TP firms or Gibraltar-based firms in (1)(b)(i) where the state of the risk is an EEA State or Gibraltar, and to the extent that the EEA State in question or Gibraltar imposes measures of like effect); and
			(b)	ICOBS 6A.5 (Retail premium finance: disclosure and remuneration).
			(c)	ICOBS 5.1.3CR(1A) , ICOBS 6.2.6R, ICOBS 6.2.7G, ICOBS 6.5.1R(3)(d) and ICOBS 6A.6 (Cancellation of automatic renewal);
			(d)	ICOBS 6B (Home and motor insurance pricing); and
			(e)	ICOBS 6A.7 (Disclosure requirements for multi-occupancy buildings insurance).

Part 2: What?
Modifications to the general application rule according to type of firm
1	Reinsurance
1.1	R	This sourcebook does not apply to activities carried on in relation to a reinsurance contract.
		[Note: recital 51 to the IDD]
2	Distribution to larger commercial customers and of specialist risks contracts
2.1	R	Subject to Part 3 of this Annex:
		(1)	the application of this sourcebook to a firm distributing general insurance contracts to larger commercial customers or specialist risks contracts is as follows:
			(a)	ICOBS does not apply where the risk is located outside the United Kingdom, irrespective of whether the customer is a consumer, commercial customer or larger commercial customer;
			(b)	the IPID requirements in ICOBS 6.1.10AR, ICOBS 6 Annex 3R and ICOBS 6.2.3R (Solvency II Directive derived information requirements) do not apply, irrespective of the risk location or whether the customer is a consumer, commercial customer or larger commercial customer; or
			(c)	where the risk is located in the United Kingdom the way that ICOBS applies is shown in the table below, based on the type of customer and contract:

Type of customer	Specialist risks contracts	General insurance contracts (excluding specialist risks contracts) distributed to larger commercial customers
Consumer	ICOBS applies, other than the rules in ICOBS 1 Annex 1 2.1R(1)(b)	N/A
Commercial customer	Only ICOBS 2 (General matters), ICOBS 6A.3 (Cross-selling) and ICOBS 6A.7 (Disclosure requirements for multi-occupancy buildings insurance) apply	N/A
Larger commercial customer	Only ICOBS 2 (General matters), ICOBS 6A.3 (Cross-selling) and ICOBS 6A.7 (Disclosure requirements for multi-occupancy buildings insurance) apply	Only ICOBS 2 (General matters), ICOBS 6A.3 (Cross-selling) and ICOBS 6A.7 (Disclosure requirements for multi-occupancy buildings insurance) apply

		(2)	[deleted]
		(3)	[deleted]

2.2	G	Firms are reminded of their obligations under Principle 12 and PRIN 2A (the Consumer Duty) or Principle 7 (as applicable) which are not affected by the modifications in ICOBS 1 Annex 1 2.1R(1)(b) above. In the FCA's view, in order to comply with those obligations, a firm should provide evidence of cover promptly after inception of a policy to its customer. In respect of a group policy, a firm should provide information to its customer to pass on to other policyholders and should tell the customer the information should be givento each policyholder.
2.3	R	[deleted]

3	Pure protection contracts: election to apply COBS rules
3.1	R	(1)	This sourcebook (except for ICOBS 4.6) does not apply in relation to a pure protection contract to the extent that a firm has elected to comply with the Conduct of Business sourcebook (COBS) in respect of such business.
		(2)	Within the scope of such an election, a firm must:
			(a)	comply with the rest of the Handbook (except for COBS 6.1A, COBS 6.1B and COBS 6.1.9 R) treating the pure protection contract as a life policy and a designated investment, and not as a non-investment insurance contract; and
			(b)	if applicable, also comply with ICOBS 4.6.
		(3)	A firm must make, and retain indefinitely, a record in a durable medium of such an election (and any reversal or amendment). The record must include the effective date and a precise description of the part of the firm's business to which the election applies.
3.2	G	(1)	The effect of COBS 9B.2.5R is that a firm is required to comply with the rules in COBS which would apply to it if it were advising on investments where that firm:
			(a)	has made the election to comply with COBS in ICOBS 1 Annex 1 Part 2 3.1R(1); and
			(b)	provides targeted support in relation to a pure protection contract.
		(2)	This is because non-investment insurance contracts are beyond the scope of the rules which apply to providing targeted support services (see COBS 9B.2.1R).
4	Chains of insurance intermediaries
4.1	R	Where there is a chain of insurance intermediaries between the insurer and the customer, this sourcebook, except ICOBS 2, applies to any insurance intermediary in contact with the customer.
4.2	G	ICOBS 2 applies to all insurance intermediaries, including those within a chain who are not in contact with the customer.
5	Travel insurance contracts
5.1	R	[deleted]
			[deleted]
5.2	G	[deleted]
6	Providing targeted support
6.1	R	A firm providing targeted support in relation to a non-investment insurance contract must comply with the rules which would apply to it if it were advising on a non-investment insurance contract.
6.2	G	(1)	The provision of targeted support services is subject to specific requirements in COBS 9B. Non-investment insurance contracts are beyond the scope of those rules.
		(2)	A firm that provides targeted support in relation to a type of specified investment which is beyond the scope of application of the rules in COBS 9B is subject to the rules which would apply to that firm if it were advising on investments.

Part 3: Where?
Modifications to the general rule of application according to location
1	EEA territorial scope rule: compatibility with European law [deleted]


2	Exemption for insurers: business with non-UK customers via non-UK intermediaries
2.1	R	This sourcebook does not apply to an insurer if:
		(1)	the intermediary (whether or not an insurance intermediary) in contact with the customer is not established in the United Kingdom; and
		(2)	the customer is not habitually resident in, and, if applicable, the State of the risk is outside the United Kingdom.
3	Exemption for insurers: business with non-UK EEA customers [deleted]
4	Firms providing services into Switzerland under Annex 4 of the BFSA
4.1	R	(1)	ICOBS 4.7 applies only in accordance with ICOBS 4.7.1R.
	G	(2)	ICOBS 4.7.1R provides that ICOBS 4.7 applies to firms providing insurance services into Switzerland under Annex 4 of the BFSA. That includes those firms to which this sourcebook may otherwise not apply because of their reliance on an exemption or exclusion (for example article 72D of the Regulated Activities Order).
Part 4: Guidance [deleted]