FCA Regulatory Priorities - Insurance: What intermediaries and distributors need to know

TLT picks out the key points you shouldn't miss...

What’s this about?

In February 2026, the Financial Conduct Authority (FCA) launched a new series of annual, sector-specific Regulatory Priorities reports designed to replace more than 40 portfolio letters. Each report is a consolidated reference point for each key sector, setting out the FCA's regulatory expectations and supervisory focus areas in one place.

The Insurance report (the Report) is the first in this series, covering four core themes of particular relevance to intermediaries and distributors:

improving consumer understanding, claims handling and service quality;
increasing access to insurance;
supporting growth and innovation; and
simplifying regulation.

Importantly, the Report is addressed directly to (among others) insurance intermediaries and price comparison websites.

Boards and chief executives of in-scope firms should take note: the FCA expects them to review the Report carefully and take prompt action to address any gaps in compliance. Firms that fail to do so risk falling short of the FCA's supervisory expectations and may face regulatory scrutiny.

Ben Player, a Partner in our Financial Services Regulatory team states...

“This Report is a clear signal that the FCA sees intermediaries and distributors as fully accountable for consumer outcomes – not just at the point of sale, but across the entire customer journey. The breadth of the FCA's focus, from claims handling and fair value to access, innovation and regulatory simplification, means that no part of the intermediary model is out of scope. Firms should treat this as a prompt to take stock of their compliance position now, rather than waiting for specific supervisory interventions. With a significant programme of reviews and consultations planned throughout 2026, there is also a real opportunity for firms to engage early and help shape proportionate outcomes”

The points not to miss...

Priority 1: Improving consumer understanding, claims handling and service quality

This is the FCA's most operationally intensive priority, with supervisory and enforcement work already under way following the Which? super-complaint on home and travel insurance claims.
The FCA’s key expectations are clear: (1) clarity; (2) fair handling of claims; and (3) adequate testing of outcomes.
The key areas intermediaries and distributors should watch are:
- Sales processes: The FCA will analyse how different sales processes affect consumer outcomes (Q1 2026), including how price comparison websites provide comparable information to support consumer understanding.
- Delegated authority and remuneration: From Q2 2026, the FCA will expand its oversight review to include delegated authority models and remuneration arrangements (findings expected early 2027). Managing general agents and coverholders should review their governance and remuneration structures now.
- Consumer understanding of home and travel cover: The FCA will review how firms communicate policy terms, exclusions, and coverage limits, sharing best practice industry-wide.
- Value measures rules: A review concluding Q4 2026 may change the nature and volume of data intermediaries are required to report.
- Digital Markets, Competition and Consumers Act 2024: Consultation is beginning on how the Digital Markets, Competition and Consumers Act 2024 is reflected in the FCA Handbook. Intermediaries operating digital distribution or price comparison models should monitor this closely.
- Consumer Duty: The overarching framework for this entire priority. Intermediaries must evidence good outcomes across the full sales and claims journey, not just in product design.

Priority 2: Increasing access to insurance

The FCA's focus here is on ensuring that vulnerable and underserved consumers can access appropriate insurance products. Whilst much of this priority is directed at insurers and product manufacturers, intermediaries and distributors have a direct role to play.
The FCA's key expectations are clear: (1) engagement with the Government's Financial Inclusion Strategy and Motor Insurance Taskforce reports; (2) delivery of good outcomes for all consumers, particularly those who are vulnerable; and (3) active exploration of ways to improve access, including through Fair Value Assessments and the Innovation Hub.
The key areas intermediaries and distributors need to watch are:
- Premium finance and fair value: The FCA's premium finance market study found that the cost of monthly insurance payments has fallen since 2022. However, the FCA has questioned some firms on their Fair Value Assessments and will continue to monitor annual percentage rates, taking action where it identifies concerns about fair value. Intermediaries who arrange or earn commission from premium finance arrangements should ensure their Fair Value Assessments are current and robust.
- Ghost broking: Where the FCA identifies unlawful content — including ghost broking (the sale of fraudulent or invalid insurance policies, often through social media or online platforms), ad-spoofing, and material posted by finfluencers — it will seek to have the content removed and will work with partner agencies, including law enforcement. Legitimate intermediaries (particularly those operating in digital channels) should ensure they have controls in place to identify and report suspected ghost broking, both to protect consumers and to guard their own reputation.
- Consumer Duty for vulnerable consumers: Firms are expected to deliver good outcomes for consumers, consistent with the Consumer Duty, especially those in vulnerable circumstances. For intermediaries, this means reviewing whether distribution models, eligibility criteria, and signposting practices actively support rather than hinder access for underserved consumers.
- Pure protection market study: The FCA will conclude its pure protection market study. Whilst its Interim Report highlighted a number of positives, the FCA highlighted it is looking to reduce the protection gap, improve consumer awareness and claims experiences, and examine claims ratios (particular for income protection products) and incentives for consumers to switch products. Intermediaries distributing protection products should monitor the final report (due Q3 2026) carefully, as findings on switching incentives and the protection gap may generate distribution-specific expectations. From reviewing the Interim Report, we recommend insurers and intermediaries review their Fair Value Assessments, audit switching data and strengthen point of sale practices where appropriate.

Priority 3: Supporting growth and innovation

The FCA's tone in this priority is broadly encouraging – it wants to support firms in innovating, adopting new technology, and developing products for emerging risks. However, that support comes with a clear expectation: firms must monitor consumer outcomes closely, and intermediaries are no exception.
The key areas to watch are:
- Artificial intelligence: The FCA will assess how firms use Artificial Intelligence (AI) in their internal processes and identify barriers to adoption. Intermediaries using or considering AI-driven tools – whether in customer-facing processes or back-office operations – should monitor the FCA's findings closely. The FCA encourages all firms, including smaller market participants, to test ideas through its sandbox services and Innovation Pathways before deploying them in live markets.
- Cyber insurance: The FCA will review cyber insurance to improve its understanding of the risks, opportunities, and barriers to purchase. For intermediaries advising commercial clients, the FCA's focus on barriers to purchase is a clear signal that distribution has a role to play in closing the cyber protection gap.
- Future of insurance products: The FCA intends to begin a conversation with industry later in 2026 on the future of insurance products and how it can help reduce barriers. Intermediaries should engage with this initiative when it launches.

Priority 4: Simplifying regulation

The FCA's key expectation is for firms to engage with it on how its rules and data requests can be streamlined, with the Consumer Duty expected to carry more weight as product-specific rules are progressively stripped back.
This priority is largely directed at insurers and the FCA's own Handbook reform programme, but there are several developments that intermediaries and distributors should monitor closely:
- Conflicts of interest rules: The FCA will respond to its consultation on rationalising conflicts of interest rules. Intermediaries, whose remuneration structures frequently give rise to conflict of interest considerations, should monitor the outcome carefully as it may simplify or reframe existing obligations.
- Disapplying Consumer Duty to non-UK business: The FCA will consult in the first half of 2026 on disapplying the Consumer Duty to non-UK consumers and reviewing the international scope of the insurance conduct of business rules. Intermediaries with cross-border distribution arrangements should engage with this consultation
- Simplification of product-specific rules and disclosure requirements: The FCA will consult on further simplification of insurance rules, including information disclosure requirements. Intermediaries should monitor the outcome, as any changes to disclosure obligations will directly affect how they present products to consumers.
- Senior Managers and Certification Regime: Working with HM Treasury and the Prudential Regulation Authority, the FCA will review the Senior Managers and Certification Regime with the stated aim of halving its regulatory burden. This is relevant to all regulated firms, including intermediaries with certified staff.
- Consumer Duty requirements review: The FCA will continue to seek views on steps that can be taken to simplify regulation now that the Consumer Duty is in place. Intermediaries should engage with this process, as the outcome may reduce or reshape some existing compliance requirements.

Key action points for intermediaries and distributors

Drawing together the themes across all four priorities, intermediaries and distributors should focus on the following key action points:

Boards and senior management should undertake a thorough review of the Report and assess their firm's current compliance position against each of the FCA's stated expectations, addressing any identified gaps as a matter of priority.
Firms should ensure they are meeting Consumer Duty obligations across the entire customer journey and can evidence good consumer outcomes at each stage.
Review and, where necessary, update Fair Value Assessments, in particular in relation to premium finance arrangements, ensuring that annual percentage rates and commission structures remain justifiable and compliant.
Managing general agents and coverholders should review their delegated authority governance frameworks and remuneration structures ahead of the FCA's expanded oversight review commencing Q2 2026.
Assess whether current distribution models, eligibility criteria, and signposting practices actively support access to insurance for vulnerable and underserved consumers, rather than creating barriers.
Implement robust controls to identify and report suspected ghost broking activity, particularly where the firm operates through digital distribution channels.
Monitor the FCA's findings on the use of AI in insurance and consider engaging with the FCA's sandbox services and Innovation Pathways before deploying AI-driven tools in live markets.
Engage proactively with upcoming FCA consultations, including those on the disapplication of the Consumer Duty to non-UK consumers, the simplification of conflicts of interest rules, changes to disclosure requirements, and the review of the Senior Managers and Certification Regime.
Monitor the outcomes of the pure protection market study (expected Q3 2026) and the value measures rules review (expected Q4 2026), as both may give rise to new distribution-specific expectations and reporting obligations.

At a glance...

Publication link	Regulatory Priorities: Insurance report
Published date	24 February 2026
Who has published it?	Financial Conduct Authority (FCA)
Publication type	Regulatory Priorities Report
Any key dates?	N/A
What's it relevant to?	FCA Regulatory Priorities Report Insurance 2026

Authors: Ben Player, Daniel Halford-Meyer, Nadina Miltiadou

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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