𝗧𝗵𝗲 𝗙𝗦𝗠𝗔 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗙𝗣𝗦 𝗘𝗰𝗼𝗻𝗼𝗺𝘆 𝗵𝗮𝘃𝗲 𝗽𝘂𝗯𝗹𝗶𝘀𝗵𝗲𝗱 𝗮 𝗷𝗼𝗶𝗻𝘁 𝗵𝗮𝗻𝗱𝗯𝗼𝗼𝗸 𝗼𝗻 𝗰𝗿𝗼𝘀𝘀-𝘀𝗲𝗹𝗹𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗮𝗻 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗰𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁

In a recent news article, the FSMA notifies insurance intermediaries and other industry professionals of the publication of a joint handbook, in consultation with the FPS Economy (available in Dutch/French only), detailing the regulatory framework on cross-selling practices involving an insurance component, i.e. in which either the main or the ancillary product is an insurance policy.

Various rules and definitions apply to cross-selling products with an insurance component, and it is not always clear how these interact. This exhaustive practice guide aims to clarify the legal framework, the relevant concepts, the division of powers between the FSMA and the FPS Economy and the rules to be observed when cross-selling a loan and an insurance product. Many illustrative instruments such as FAQs and diagrams and additional references are included. A comparison is made between the applicable provisions in the law of 4 April 2014 on insurance and Books VI & VII of the Code of Economic Law (CEL), together with a distinction between the two main cross-selling practices of ‘tying’ (the obligatory purchase of a product or service together with an insurance policy) and ‘bundling’ (a package of which the components can also be acquired separately). 

The basic provisions on the ‘combined offer’ are set out in Book VI CEL. Following the transposition of the Insurance Distribution Directive (IDD), specific rules of conduct were incorporated into the 2014 law on insurance for cross-selling practices in which at least one component is an insurance product. The latter constitute a ‘lex specialis’ and hence take precedence. However, if the insurance is an ancillary product to an investment service, a mortgage loan or a payment account, the law on insurance refers to other specific rules on cross-selling that derive from the transposition of European Directives. 

Book VII CEL, for its part, deals with the cross-selling of mortgage loans and insurance. The cross-selling of consumer credit and insurance falls within the scope of the law on insurance, but Book VII CEL also contains provisions on insurance as an ancillary service to consumer credit. The more general provisions of Book VI CEL supplement the specific provisions on insurance in conjunction with mortgage loans and consumer credit in Book VII CEL, and also apply in the absence of other specific legislation. The provisions on unfair commercial practices in Book VI CEL apply to instances of tying and bundling as well. All these complexities and interrelations are set out in a clear and comprehensible manner (see https://lnkd.in/eaXhwbza).

Questions? Contact our Insurance expert Sandra Lodewijckx