UK's FCA prioritises predictability in insurance regulatory strategy: Biba panel

ReutersMay 15, 2025 6:35 PM

FCA aims to strip outdated rules to lower costs and improve access
Sicsic notes flexibility may challenge smaller firms under principle-based approach
FCA's principle-based approach shifts risk balance to market

By Michael Jones

May 15 - (The Insurer) - UK regulator Financial Conduct Authority's focus on proportionality and predictability is a welcome shift for the insurance industry, a Biba panel said on Thursday.

Former FCA head of supervision and Sicsic Advisory managing partner, Michael Sicsic, said the FCA's new strategy was welcome, partly thanks to the lack of "new massive initiatives".

"I think the fact that there is a sense of consistency in what the FCA is doing, I think it's a sense of relief of no new big things", Sicsic said.

The FCA said on Wednesday that it plans to strip away "outdated or duplicated" rules to lower costs and improve access for policyholders while maintaining appropriate levels of protection, under the wider aim to boost the growth and competitiveness of UK financial services.

FCA head of insurance, Lisa Sturley, said the regulator sought to provide a reliable framework that emphasised proportionality and predictability.

Sturley said the new FCA strategy aims to deepen trust with the industry through enhanced visibility and the increased communications with the market.

Although he welcomed the shift in tone towards a more proportionate regulatory approach, Sicsic said the flexibility associated with a "principle-based approach" could be difficult for certain firms, particularly those at the smaller end.

Sicsic said: "It's nice, but it's putting a lot of the onus on firms. I think when the FCA says rebalancing risk, it's rebalancing risk between them and the market. So I think it's depending on how the market takes that."

He said the expectation will be that large firms with greater capabilities will need to take on more in terms of defining how that rebalancing will look.

The FCA strategy proposed the creation of a new definition for large commercial insurance customers who should not be captured by its conduct rules, which it said would ease the burden on firms insuring larger, more sophisticated buyers.

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