CP26/22: FCA consults on narrowing ICOBS and PROD 4 territorial scope and simplifying insurance disclosure rules

Action required. Insurance intermediaries, insurers, Lloyd's market participants, Gibraltar-based firms, and temporary permission firms.

The FCA published CP26/22 on 26 June 2026, consulting on a package of simplifications to insurance conduct rules. Responses close on 4 September 2026.

The central proposal is a narrowing of the territorial scope of ICOBS and PROD 4. Under the proposals, detailed insurance conduct requirements would apply only where there is a clear UK connection, assessed by reference to the customer's habitual residence and, where relevant, the location of the risk. The proposals would require firms with mixed UK and non-UK customer books to determine where the boundary falls for their business. The consultation does not specify how habitual residence will be defined or evidenced in practice.

High-level requirements will not fall away for non-UK business. The Principles (other than the Consumer Duty) and SYSC rules will continue to apply even where ICOBS and PROD 4 are disapplied.

The scope changes are designed to run consistently with a companion consultation, CP26/23, which proposes disapplying the Consumer Duty to business with non-UK customers. CP26/23 has a separate response deadline of 19 September 2026.

The consultation also proposes three changes beyond territorial scope:

• Disclosure simplification. Certain duplicative or low-value ICOBS disclosure requirements would be removed where they do not meaningfully help customers make choices. Firms would gain greater flexibility to use digital channels, but must still provide information in a durable medium appropriate to the customer's needs, and on paper on request.
• Advice definitions. References to 'advice' that do not involve a personal recommendation would be removed from the advised sales rules, leaving a cleaner distinction between personal recommendation sales and other sales.
• Professional indemnity insurance (PII): currency redenomination. Minimum PII levels for insurance intermediaries would be redenominated from euros to pounds sterling at an appropriate conversion rate. The underlying minimum levels are not changing. The proposed conversion rate is not specified in the available source material.

CP26/22 forms part of the FCA's broader programme to streamline insurance regulation, following final rules published in December 2025 under PS25/21, and a commitment made in a January 2025 letter to the Prime Minister to reduce conduct rules applicable to wholesale insurance. As background, Handbook Notice No. 142 finalised a prior set of insurance rules, distinct from those proposed in CP26/22: most of those rules came into force on 26 June 2026, with the remainder due on 27 July 2026.

The consultation does not set out transitional arrangements or an implementation timeline.

Sources

• Cp26 22 simplifying insurance rulesfca.org.uk