Biba calls for removal of larger commercial customers from scope of Consumer Duty

Biba has called for larger commercial customers to be removed from the scope of the FCA’s Consumer Duty regulation.

The trade body issued a statement in response to the regulator’s discussion paper DP24/1, which sought industry feedback on its regulation of commercial and bespoke insurance business.

By removing larger small and medium sized enterprises (SMEs) from the scope, Biba feels this will reduce the regulatory burden on insurance brokers.

Biba said that many larger firms were ”experienced buyers of insurance, with some potentially having a professional risk manager”.

”These increased levels of knowledge mean they are less vulnerable to harm,” it added.

Meanwhile, Biba also said that members agree that there is a need to review the definition of a retail customer.

The FCA currently define a retail customer as “an individual who is acting for purposes, which are outside trade, business or profession”.

Biba said changes it was proposing “will help the FCA demonstrate that it is meeting its new requirements under the growth and competitiveness objective”.

Discussion paper

The Consumer Duty rules were introduced in July 2023 and sets out requirements for firms to follow to deliver good outcomes for their customers.

The DP24/1 discussion paper invited feedback on whether the FCA’s rules strike an appropriate balance between safeguarding those customers who require regulatory protections and competitiveness in the commercial general insurance market.  

It was unveiled on 29 July 2024, with feedback being welcomed until 16 September 2024.

Graeme Trudgill, Biba’s chief executive, said: “Reducing the scope of the Consumer Duty is one of our most important manifesto aims and we are delighted that the FCA have consulted on it. 

“This is an opportunity to achieve change and help improve the burden of regulation on members.”