Treasury consults on IDD implementation

Treasury is consulting on UK transposition of the IDD, which must take place by 23 February 2018. Treasury notes that many of the key changes the IDD brings will not have a significant effect on UK firms since, for example, the UK already applies the current IMD to insurers as well as intermediaries (when the IMD covers only intermediaries, but the IDD covers both). It also note the IDD is a minimum harmonisation directive and that the UK has gone above minimum standards in many aspects of its current regulation. However, Treasury will need to make some changes to legislation to implement the IDD, and FCA will need to make changes to its rules.

The consultation poses a number of questions, including:

  • whether the UK should continue to require life and liability products sold as an add-on to a non-insurance product, so they continue not to benefit from the RAO’s connected contracts exclusion;
  • extending existing exemptions to cover the sale of add-on products to cover non-use of services (eg cancellation cover for concerts);
  • making other adjustments to the connected contracts exclusion;
  • whether the UK should continue to regulate insurance products sold as an add-on to travel products and services (going beyond the IDD as it did beyond the IMD)
  • continuing to regulate the sale of motor warranties when they are contracts of insurance;
  • creating further exemptions so that firms that merely provide information will no longer have to be IARs, but that introducers that do more than this should continue to fall within the scope of regulation;

Treasury will feed into the implementation process the results of its consultation on advice. Alongside the consultation, Treasury has published a draft statutory instrument making its proposed changes, and amending legislation to meet the requirements of the IDD, including on application timescales and passporting (continuing to follow the Government’s line of fully implementing all EU legislation that is due to take effect before Brexit). Treasury asks for comments by 22 May.


Emma Radmore