The Isle of Man regulator has confirmed that life companies and advisers will not have to provide key or summary information documents to policyholders in Argentina, the EU, Hong Kong, Qatar, Singapore, South Africa, the UK or the UAE.
It was established in early drafts of the code that jurisdictions with similar disclosure requirements would be exempted from duplicating information already provided to clients under local rules.
The UK is an obvious example, with the Retail Distribution Review (RDR) meeting all of the IoM’s requirements.
But it has also raised some questions, such as:
“Do the carve outs not undermine the integrity of the code?”
International Adviser put this question to the Isle of Man Financial Services Authority.
“The exemptions set out under paragraph 25 of the code relate to certain, specific requirements, principally around the requirement to produce Key or Summary Information Documents,” a spokesperson said.
“All other requirements within the code must be observed. The established concept of equivalence is reflected in our approach to taking account of comparable requirements in other jurisdictions through the use of specific exemptions was first proposed in our consultation exercise in 2015 and has underpinned our development work in this area.
“The code introduces new requirements in a number of areas with the overriding aim of requiring insurers to embed the fair treatment of policyholders within their business culture and to implement policies and procedures which reflect fair treatment as a key strategic objective.”
“Carve-outs were expected, but is eight not a lot?”
The spokesperson said: “The Authority has been clear in communicating its proposals in this specific matter; as noted our first proposals in this area were consulted upon in 2015. Our subsequent consultation in 2017 set out our more detailed proposals, including the jurisdictions in which the Authority intended to provide exemptions.
“At that point in time there were eight exemptions proposed within the draft code. The final code includes one additional jurisdictional exemption and a modification to the exemption for business written in the United Arab Emirates.”
And finally: “How does it not make it look as if industry has prevailed in pushing back against the regulator?”
“The Authority has been consistent in its stance that the code should be developed to take account of the requirements and developments in other jurisdictions,” the spokesperson added.
“The decision to provide for an exemption is based on the Authority’s review of comparable conduct requirements in other jurisdictions. While industry feedback has played an important part in developing the requirements in the code, liaison with other key stakeholders, including the regulators in the jurisdictions in which Isle of Man insurers operate, has been key to the consultation and development process.
“Ultimately, the decision to grant exemptions from certain, specific requirements of the code sits with the Authority.”
Industry reactions
The regulator’s response chimed with comments from the chief executive of Utmost Wealth Solutions, Mike Foy.
He told IA: “While there are indeed quite a number of exemptions, these are mainly in respect of territories where comparable or stronger conduct of business requirements are already imposed by the regulator in the jurisdiction in which the policy is being sold.
“For example, the UK already has a full disclosure regime, including the requirement for a key information document; which we and other Isle of Man companies transacting business in the UK have to produce. Hong Kong similarly is subject to disclosure requirements out with those of the IoM code.”
His comments were echoed by Sean Christian, managing director and executive director for Canada Life’s International Business.
He told IA that the company is “delighted to see the IoM Conduct of Business Code being published after a number of years of the industry and regulator working collaboratively together in developing a set of new regulation that truly ensures the customers’ interests are at the heart of IoM licence holders’ businesses”.
He added that companies used to distributing products in the UK, life Canada Life, “there is little in the code that is actually new”.
“It very much replicates the UK Treating Customers Fairly regime and, in parts, mirrors some of the outcomes brought about under the UK RDR in 2013 and more recently through the Priips legislation.”
He views the code as “setting down a clear marker of the intent that the Isle of Man is playing a significant and vital role in driving international standards around customer protection and product transparency”.
Impact on advisers
For James Pearcy-Caldwell, chief executive of UK advice firm Aisa, the key issue is that “the emphasis on meeting disclosure and reporting requirements falls even more heavily on the adviser firms operating in the eight jurisdictions”.
“They will be the ones breaking the law if they do not disclose.”
He added that his firm “asks providers to assist us in meeting disclosure requirements. If a provider is not prepared to issue Kid documents or to disclose; we, along with most IFAs, would not use them”.
