The FCA and its Competition Agenda – what could this mean for Insurers?” Hilton Euston Hotel 20 January 2017 | Strictly Private & Confidential

Introduction

Compliance Monitoring Phil Deeks TCC Technical Director Conduct & Culture FCA Technical Specialist Sector Team Deloitte Senior Manager Risk & Regulation Legal & General Group Compliance Policy Millfield Group Compliance Manager Compliance Monitoring Fin Proms 21/09/2018

FCA’s competition agenda

FCA’s Operational Objectives FCA Objectives FCA’s Strategic Objective To ensure that the relevant markets function well FCA’s Operational Objectives To secure an appropriate degree of protection for consumers To protect and enhance the integrity of the UK financial system To promote effective competition in the interests of consumers

FCA’s competition objective “To promote effective competition in the interests of consumers.” 2013 FCA objective and duty 2015 FCA concurrent responsibility FCA’s Viewpoint Competition can deliver lower prices, improved quality of service, better value for money and new and innovative products. Done properly regulation can help competition thrive. Competition is not an alternative to regulation. Proportionate regulation is a pre-requisite for competition in financial services to thrive.

FCA Competition Division Embedding competition thinking across the wider policy, supervision and enforcement work the FCA carries out AIM Forms part of Chris Woolard’s remit - Strategy & Competition Headed up by Mary Starks and Deb Jones, with 60 staff LOGISTICS Identify concerns and address issues which inhibit the ‘virtuous circle of competition’ APPROACH

FCA Competition Division – the virtuous circle Well informed and engaged consumers can play a key role in driving effective competition between firms Effective competition provides firms with incentives to deliver what consumers want, provide value for money efficiently with innovation

FCA Competition Division INDICATORS TOOLS Market concentration Entry and expansion Consumer satisfaction Shopping around and switching Merger Control Market Study Prohibition against anti-competitive agreements Prohibition against abuse of dominance Firm engagement (individual discussions, advisory letters, on-notice letters) Behavioural Economics

FCA competition agenda Areas where the FCA has focussed on competition Retirement Income Market Study Asset Management Market Study Fair treatment of long standing customers in the life insurance sector Credit card market study Current account switching General Insurance add-on markets Increasing transparency and engagement at renewal stage

FCA Competition Division - achievements Well informed and engaged consumers can play a key role in driving effective competition between firms Effective competition provides firms with incentives to deliver what consumers want and to provide value for money as efficiently and innovatively as possible Helped consumers to act on their decisions Helped consumers get the information they need Simplified processes Helped consumers assess the best choices for them Encouraged innovation Used powers to ensure firms compete fairly

Competition in insurance sector

Competition in the insurance space Potential Areas of Focus Distribution Concentration and integration Price Renewals Increasing costs Technology Implementation of interventions Individual firm engagement In fact, any area of inappropriate use of BE/data

What steps can a firm take?

What steps can a firm take? Culture and governance Robust product/service governance model Peer benchmarking 21/09/2018

What steps can a firm take? Culture and governance 21/09/2018

meeting the specific rule requirement Culture PAST PRESENT FUTURE Compliance is … meeting the specific rule requirement Conduct is … looking at the spirit of the rule to design a solution that will achieve a good customer outcome Culture is … understanding and then executing the right thing for customers driven from the firms’ inbuilt and inherent behaviours, values, thinking and decision making. 21/09/2018

FCA’s expectations of firms Senior individuals accountable for defined roles and areas of the business Senior team can to articulate what good outcomes for customers looks like and key principles of good market and consumer behaviour are and deploy them Culture of accountability at levels within firm Proactively and instinctively identify customer risks from their business model, strategies and operational process – and exert effort to address them 21/09/2018

What steps can a firm take? Culture and governance Robust product/service governance model 21/09/2018

Product/service governance model elements Business Model Conflicts of interest Value for money Appropriate target market Design and develop’nt of product/ service features Objective Customer Research Idea generation Appropriate distribution proposition Information to distributors (if applicable) Stress Testing and modelling Appropriate customer information Ongoing maintenance and review Post sales servicing MI MI Corporate governance 21/09/2018

What steps can a firm take? Culture and governance Robust product/service governance model Peer benchmarking 21/09/2018

Thank you Any questions? Phil Deeks 07808 521 586 pdeeks@tcc.group www.tcc.group

© 2016 The Consulting Consortium Ltd | Template V1