The head of regulatory at the  Lloyd’s Market Association (LMA) has said the London market needs to ensure that a wave of new regulation is proportional and will not remove the ability to access existing and new markets.

John Levett, head of regulatory affairs at the LMA spoke to Emerging Risks as the association published new guidance for managing agents on PS25/21: Simplifying the insurance rules, supporting firms in applying the Financial Conduct Authority’s (FCA) more proportionate regulatory approach to commercial and wholesale insurance business.

He added the  guidance is designed specifically for Lloyd’s managing agents and highlights key updates to the FCA rulebook arising from PS25/21, including how firms can take advantage of greater flexibility within product governance, oversight and review requirements, while continuing to deliver good outcomes for customers.

PS25/21 represents the FCA’s first policy statement aimed at unwinding some of the regulatory burden that followed the pricing practices market study, where rules designed for retail products were applied across all general insurance business. The LMA guidance explains how managing agents can use the revised framework to focus conduct risk resources where they are most needed.

Key areas covered in the guidance include:

• Proportionality based on customer type and size, including application of a new SME watershed aligned with Financial Ombudsman eligibility.
• Wider use of the bespoke exemption, enabling tailored and open market business for smaller business customers and individuals to sit outside product governance requirements where appropriate.
• Greater flexibility around accountability, including the ability for a lead underwriter to assume sole responsibility for manufacturer obligations on subscription and binder business.
• A more risk-based approach to product review frequency, removing the default annual review requirement.

Levett, said: “PS25/21 is a first step towards a more proportionate regulatory regime for the London market. This guidance has been drafted in collaboration with managing agents and shared with the FCA for comment before publication. Applying these changes should reduce the regulatory burden for the majority of our members. We thank the FCA for all the hard work it has done so far.

“There are still changes needed to better support our market and deliver on the international competitiveness and growth objective. Trading in 200 territories, all with their own rules and regulators, is highly complex and can lead to differences between UK and local rules. We will therefore continue to lobby the FCA on developing a regulatory framework appropriate for international business being written in the Lloyd’s market.”

He continued: “Regulation of the London market is in a good place we have seen a period of stability.

“What we have been working for is the implementation of regulations in a proportional way. We want to ensure that the regulations are applied enables the market to remain competitive and also allow us to access the global market.

“We have to remember that 85% of the business which comes into Lloyd’s is international and as such we have to ensure that we can maintain access to those markets.”