FCA updates ICOBS 5.3 guidance on advised insurance sales

The Financial Conduct Authority (FCA) has updated its insurance conduct rules so that new guidance on advised sales sits within ICOBS 5.3, the section of the handbook covering advised sales. The new provisions, ICOBS 5.3.1A and ICOBS 5.3.2, took effect on 26 June 2026¹.

ICOBS 5.3.1A is guidance on packaged policies. It states that where a firm provides advice to a customer in relation to a package which may include several policies, the firm should ensure the suitability of advice in ICOBS 5.3.1R in relation to each policy on which the firm is advising the customer¹. The underlying rule at ICOBS 5.3.1, dated 1 October 2018, requires a firm to take reasonable care to ensure the suitability of its advice for any customer entitled to rely on its judgement¹.

ICOBS 5.3.2 is headed "Suitability guidance for pure protection contracts" and also carries the 26 June 2026 date¹. It sets out three steps a firm should take when taking reasonable care to ensure the suitability of advice on a pure protection contract:

Step	What the guidance says
(a)	Establish the customer's demands and needs using information readily available to the firm and by obtaining further relevant information from the customer, including details of existing insurance cover. It need not consider alternatives to policies, nor customer needs not relevant to the type of policy or policies in which the customer is interested.
(b)	Take reasonable care to ensure a policy is suitable for the customer's demands and needs, taking into account its level of cover and cost, and relevant exclusions, excesses, limitations and conditions.
(c)	Inform the customer of any demands and needs that are not met.

Paragraph (2) of ICOBS 5.3.2 is marked deleted¹.

Other parts of ICOBS 5 carry different dates. ICOBS 5.1.1, guidance on eligibility to claim benefits, is dated 27 July 2026 and sits alongside the Consumer Duty, stating that a firm should take reasonable steps to ensure a customer only buys a policy under which they are eligible to claim benefits². ICOBS 5.1.4, on disclosure, is dated 1 October 2013². The demands and needs rules in ICOBS 5.2, including the requirement that a sale of a contract of insurance must always be accompanied by a demands and needs test, are dated 1 October 2018². ICOBS 5.3.3, on advice given on the basis of a fair analysis, and ICOBS 5.3.4, on personalised explanations, are also dated 1 October 2018¹.

The FCA has not reported, in these pages, what prompted the June 2026 additions or whether any consultation preceded them.

Why it matters for households

The guidance applies to firms advising on insurance, not to consumers directly, but it describes what customers can expect when advice is given. Where a firm advises on a package containing several policies, the suitability test applies to each policy individually rather than to the package as a whole¹. For pure protection contracts, such as life or critical illness cover, the guidance sets out that firms should ask about existing cover, weigh the level of cover and cost against exclusions, excesses, limitations and conditions, and tell the customer about any demands and needs the policy does not meet¹.

The separate guidance at ICOBS 5.1.1, dated 27 July 2026, concerns eligibility to claim. It says firms should consider whether a customer meets qualifying requirements for the different parts of a policy and will continue to meet them through the term, and should inform the customer if not, so they can take a properly informed decision on whether to buy². It gives age limits as an example of a change a firm reasonably ought to know about².