CP26/22, published on 29 June 2026, is the FCA's second consultation on simplifying the insurance rules. It builds on PS25/21, which finalised the first phase in December 2025, and focuses on firms that operate internationally from the UK, on disclosure and on advised sales. The consultation closed on 4 September 2026, and the FCA has said the changes would come into force shortly after they are made, on a forward-looking basis.
A separate consultation, CP26/23, covers the scope of the Consumer Duty, including for non-UK customers. Firms writing international business should read the two together.
The main proposals
| Area | Proposal |
|---|---|
| PROD 4 product governance | Disapplied where the product is available only to customers outside the UK, all policyholders live outside the UK and the risks are outside the UK |
| ICOBS conduct rules | Disapplied where both the customer's habitual residence and the location of the risk are outside the UK |
| Commercial customers | Commission disclosure on request retained |
| Fiduciary guidance | Applied to all customers, not only commercial customers |
| Disclosure | Changes to the format of disclosures and removal of certain disclosures |
| Advised sales | Changes to the rules on advised sales |
| Professional indemnity insurance | Minimum limits converted from euros to sterling for intermediaries, including home finance credit intermediaries |
International business written from the UK
The territorial changes matter most to London market firms, MGAs and brokers placing non-UK risks. Under the proposals, a product sold only to customers outside the UK, with all policyholders and risks outside the UK, would fall outside PROD 4. ICOBS would not apply where both the customer and the risk are outside the UK, but would apply in full if either is in the UK.
Firms will need clear processes to identify where customers live and where risks are located, and to keep products within the carve-out. Mixed books, where some customers or risks are in the UK, stay fully in scope.
Firms should also consider how the carve-outs interact with other regimes. Business with non-UK customers may be subject to the rules of the country where the customer or risk is located, including local conduct, product oversight and disclosure requirements. Removing FCA rules does not remove those obligations. For EU risks, firms writing through EU subsidiaries or freedom of services arrangements should check the local requirements before relaxing any process. In practice, many firms will keep a single global product governance process with UK-specific elements switched off for carved-out business, rather than run two separate processes. Our guide to insurance product oversight and fair value covers PROD 4 for business that remains in scope.
The changes also matter for UK firms acting for overseas insurers or placing business with them. Coverholders and brokers dealing with risks located abroad should check how each product is described in their agreements and whether the carve-out conditions are met on the facts, not just in the contract. Lloyd's market participants should also check any Lloyd's requirements that apply regardless of the FCA's carve-outs.
What does not change
The proposals do not remove the Consumer Duty for UK retail customers, the fair value requirements for in-scope products, or claims handling standards. The FCA has also said firms are not required to change approaches that already meet the existing standards. For brokers and MGAs, the core expectations on oversight of delegated authority and appointed representatives remain. The FCA's work on claims handling, premium finance and fair value assessments continues outside CP26/22, and firms should not assume those areas are being relaxed. Our articles on Consumer Duty for brokers and MGAs and delegated authority compliance cover those areas.
How CP26/22 builds on PS25/21
PS25/21, finalised in December 2025, made the first set of simplifications, including changes to product governance reviews and some reporting requirements. CP26/22 continues the same direction with a narrower focus: business with no UK customers or risks, disclosures, advised sales and professional indemnity limits. The FCA's message is consistent across both: rules should focus on UK customers and on outcomes, and firms that already meet the existing standards need not change what they do.
Applying the territorial carve-outs in practice
The carve-outs depend on facts that must be checked and kept up to date. For each product, firms will need to show that it is only available to customers outside the UK, that all policyholders live outside the UK and that the risks are located outside the UK. For ICOBS, the test is both the customer's habitual residence and the state of the risk. Practical controls include:
- onboarding questions that capture residence and risk location;
- distribution agreements that restrict sales to non-UK customers;
- monitoring that flags UK customers or risks entering a carved-out product;
- a process to bring a product back into scope if UK business appears.
Firms that rely on the carve-outs without these controls risk finding UK customers in products they treated as outside the rules.
Who should act
| Firm | Priority |
|---|---|
| Insurers and MGAs writing non-UK business | Map products against the territorial tests; update product governance records |
| Brokers placing international risks | Update customer and risk location checks; review ICOBS application |
| Brokers with commercial clients | Confirm commission disclosure on request process |
| Intermediaries holding PII | Check limits against the sterling minimums once final |
| All firms | Review disclosure documents against the final rules |
Disclosure and advised sales
The proposed changes to disclosure format and to some specific disclosures aim to reduce documents customers do not read, while keeping the information they need. Firms should review their policy summaries, demands and needs statements and pre-contract information once the final rules are published, and use consumer understanding testing to decide what to keep. For advised sales, firms should check how the changes affect their advice processes, suitability records and the training given to advisers. As with the other changes, the FCA's position is that firms may keep existing approaches that already meet the standards.
A practical plan
- Map products and customers by location to see which business the carve-outs would cover.
- Decide whether to rely on the carve-outs or keep existing processes, and record the decision.
- Update product governance and conduct procedures, with controls to keep business within the carve-out.
- Review disclosure documents and advised sales processes against the final rules.
- Check professional indemnity cover against the sterling minimums.
- Read CP26/23 alongside, because the Consumer Duty scope affects the same business.
Firms should also keep in mind that the FCA's direction of travel is towards fewer rules but closer supervision of outcomes. Simplification removes some requirements, but the FCA has been clear that it will act where outcomes for UK customers are poor. The time saved on rules that no longer apply is best spent on evidence of good outcomes for the business that remains in scope.
How regulatory counsel helps
We help insurers, MGAs and brokers map their business against the new territorial tests, update product governance and conduct frameworks, and review disclosures and advised sales processes. Our insurance practice supports firms through the final rules.