Category: Compliance & AML · Reviewed by Amy Price, Account Executive · Last reviewed June 2026
The ICOBS chapter requiring firms to specify the customer’s demands and needs in good time before contract conclusion, and — where personal recommendation is given — to ensure the recommendation is consistent with those demands and needs.
ICOBS 5 sets out the rules on identifying customer demands and needs, the personal recommendation standard (where given), and the specific signposting rules for travel insurance. It is the gateway between an insurance distribution interaction and a contract — the firm must understand what the customer needs before recommending or arranging cover.
FCA Handbook, ICOBS 5. Made under FSMA sections 137A and 138, implementing UK retained IDD Article 20 (advice and standards for sales where no advice is given).
ICOBS 5.2.2R requires firms to seek information about the customer to allow demands and needs to be specified, to base any recommendation on a sufficient analysis of those needs, and to communicate the demands and needs to the customer in a Demands and Needs Statement before contract. Where the firm proposes a contract consistent with the demands and needs, this must be made clear. Where there is a deviation (e.g. customer wants cover that does not meet a need), the deviation must be drawn to attention.
For execution-only sales (where the customer has identified the product without firm input), the demands and needs requirement still applies but is calibrated. Travel insurance has additional signposting rules under ICOBS 5.1.5BR for medical-condition customers.
Apex’s renewal process for a commercial fleet policy captures the customer’s current vehicle list, drivers, mileage, claims history, optional cover preferences and any change in business activity. The demands and needs statement at renewal records the customer’s stated requirements, the matched cover, and any deviations.
FCA Handbook, ICOBS 5. Financial Services and Markets Act 2000, sections 137A and 138. UK retained Insurance Distribution Directive (Directive (EU) 2016/97), Article 20.
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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