Following discussions on behalf of our members with the FCA, we are pleased to provide clarification regarding remuneration disclosure requirements, specifically concerning “work transfer” arrangements under ICOBS 6A.7.8R. These discussions reflect our commitment to ensuring MGAs can confidently navigate compliance requirements while we actively advocate for the unique regulatory needs of our members.
MOBI Leaseholders Information: Clarifying Remuneration Disclosure
MGAA understands the integral role MGAs play as insurer agents, where underwriting is combined with regulatory, risk management, and analytical responsibilities. Many members have shared their view that remuneration linked to delegated underwriting authority agreements, including “work transfer” arrangements, should not necessarily be categorized as disclosure-worthy remuneration. However, the FCA mandates that all participants in the insurance distribution chain provide transparency in remuneration structures. Under ICOBS 6A.7.8R, this includes:
- Total commissions received by the MGA and associated parties.
- Any financial incentives provided by the MGA to third parties that could impact consumer costs, such as those borne by leaseholders in multi-occupancy building insurance contracts.
Regulatory Classification and Disclosure Obligations
Despite MGAs’ position as underwriters, the FCA aligns MGAs with brokers in terms of disclosure obligations. This classification reflects the regulatory permissions held by MGAs, akin to brokers, and emphasizes the importance of transparency across the insurance distribution chain. Through our dialogue with the FCA, MGAA continues to press for greater recognition of MGAs’ unique role, advocating for tailored regulatory interpretations that acknowledge these distinctions.
Comprehensive Disclosure Expectations and Advocacy Efforts
To ensure full compliance with ICOBS 6A.7.8R, MGAs are encouraged to disclose all forms of remuneration, including any financial incentives to third parties, such as managing agents or freeholders, that might affect leaseholder costs. Our team is actively exploring avenues to clarify these requirements further with the FCA, advocating for a regulatory perspective that better aligns with the practical and operational realities of MGAs.
Additionally, in response to member feedback, MGAA is pursuing the potential to recognize MGAs more akin to “insurers” than “brokers.” We are committed to keeping members fully informed of progress in these efforts, ensuring that any regulatory updates are provided well in advance.
Ongoing Support for Our Members
MGAA is dedicated to supporting our members in the compliance arena, offering insights, resources, and representation to ease regulatory navigation. Our advocacy work with the FCA, combined with continuous compliance guidance, demonstrates our commitment to reinforcing members’ operational integrity while fostering transparency and accountability within the sector.
For further questions or additional clarification, please reach out to memberservices@mgaa.co.uk.
