London's wholesale insurance market has spent three years pressing regulators for clarity on a question that cuts to the heart of the UK's competitiveness as an international insurance centre. Should business placed on behalf of non-UK clients be subject to UK conduct rules designed for retail consumers? The Financial Conduct Authority (FCA) has now moved to answer it.
Proposals published on 29 June 2026 would remove genuinely overseas business from the scope of the Consumer Duty where there is no clear UK link and no reasonable expectation of UK regulatory protection.
For Lloyd's and London Market firms handling cross-border placements, transactions with no UK nexus would fall outside the Duty's remit. Wholesale brokers would no longer need to document why individual overseas placements do not trigger retail conduct obligations.
The FCA's consultation paper sets out three practical changes. Business for genuinely non-UK customers is excluded where no UK connection exists. The scope boundaries are drawn more clearly, so firms no longer need to demonstrate the negative. Firms' responsibilities across distribution chains, covering delegated authority arrangements and complex product structures, are also clarified.
The proposals arrive as a response to industry pressure that had been building for years. In December 2025, Caroline Wagstaff, chief executive of the London Market Group, said the market had sought removal of non-UK customers from the regulator's remit for three years.
Christopher Croft, chief executive of LIIBA, called the previous deferral disappointing. He said clarity on non-UK business would shape views on the UK market's international competitiveness.
The distribution chain question carries particular weight for MGAs, coverholders, and managing agents, which regularly sit across multiple links in a placement structure. Where Consumer Duty obligations begin and end in those arrangements has been a source of compliance uncertainty since the Duty came into force in July 2023.
The FCA's 2026 Regulatory Priorities report had already placed delegated authority arrangements under scrutiny. The regulator examined outsourced structures and remuneration across distribution chains.
The Managing General Agents' Association (MGAA) noted the FCA was committed to a more proportionate approach, while making clear that conduct standards across binder chains would remain a supervisory focus.
Simon Walls, executive director of markets at the FCA, said the Duty was never designed to operate as a wholesale regime. "The Consumer Duty is helping deliver good outcomes and build confidence for retail consumers, but it was never intended to become a Wholesale Duty, imposing on deals between sophisticated parties," Walls said.
The Consumer Duty proposals were published alongside a separate FCA consultation on simplifying its insurance rulebook. The regulator said the changes aim to reduce complexity while maintaining consumer protections.
The Lloyd's Market Association (LMA) had already published implementation guidance for managing agents on PS25/21, the FCA's earlier insurance simplification policy statement. That guidance covered product governance, delegated authority binder chains, and the shift to risk-based product review cycles.
The LMA said it would continue to lobby the FCA on a regulatory framework appropriate for international business written in the Lloyd's market.
Meanwhile, in a statement issued to Insurance Business, London and International Insurance Brokers' Association (LIIBA) CEO Christopher Croft welcomed the publication of the consultation paper.
"Our initial thought is that we welcome the establishment in the handbook of the previous position FCA had confirmed to us – that its conduct and product governance rules do not apply to overseas business. This considerably reduces the regulatory burden on our members who are predominantly active in international markets," he said. "It is a boost to London’s international competitiveness.
"The other proposals around disclosure and reporting – whilst primarily aimed at the retail markets that LIIBA members do not participate in – also show a reassuring willingness on the part of FCA to examine the impact its rules have – especially on small broker businesses – and seek to be proportionate in its application."
When PS25/21 was published in December 2025, the International Underwriting Association (IUA), the Chartered Insurance Institute (CII), and the LMA each issued responses.
Cormac Bradley, senior actuarial director at Broadstone, described that package as a proportionate update rather than a wholesale rewrite. Wagstaff had called for clarity on non-UK customers to be resolved by end of 2026, a deadline the current consultation is working to meet.
For compliance teams at managing agents, wholesale brokers and specialist MGAs, fewer transactions will now require the documentation burden previously considered necessary.
Both consultations are open for responses.
