Category: Compliance & AML · Reviewed by Mark Fox, Broker · Renewals · Last reviewed June 2026
The identification of the group of customers for whose needs, characteristics and objectives a product is designed and compatible — together with the negative target market for whom the product is not appropriate — required under the IDD POG framework and the Consumer Duty Products and Services outcome.
A target market assessment identifies the type of customer (the target market) for whom a product is designed and compatible. It also identifies the negative target market — the customer types for whom the product is not appropriate. Both are required to be documented at the product approval stage by the manufacturer and reviewed periodically.
FCA Handbook, PROD 4 (and ICOBS 6A) implementing UK retained IDD Article 25 and UK retained Commission Delegated Regulation (EU) 2017/2358. The Consumer Duty Products and Services outcome (PRIN 2A.3) reinforces and updates the target-market requirement.
The manufacturer’s target market is articulated by reference to relevant customer characteristics — e.g. type of customer (consumer / SME / mid-market), demographics, knowledge and experience, financial situation, objectives, risk tolerance. The negative target market identifies who the product is not appropriate for — e.g. customers needing a specific cover the product excludes, or customers below a certain risk threshold the product is not priced for. Distributors confirm the target market within their own distribution and refrain from selling outside it.
For commercial products the target market identifies the type of business, sector, size, risk profile and any specific exposures. For consumer products the target market may include demographic and behavioural variables. Vulnerable customer considerations cut across — a product designed for a typical target may have features that disadvantage vulnerable customers, who should be considered explicitly.
A commercial landlord insurance product might have a target market of UK-based individual landlords with 1–10 residential rental properties, AST tenant types, and standard construction. The negative target market might include multi-let HMOs above a defined room count, non-residential or holiday-let exposures, and properties with adverse claim history above a threshold. Apex confirms each renewal against this target market and where the customer falls outside it considers alternative products.
FCA Handbook, PROD 4 and ICOBS 6A. UK retained Insurance Distribution Directive (Directive (EU) 2016/97), Article 25. UK retained Commission Delegated Regulation (EU) 2017/2358. FCA Handbook, PRIN 2A.3.
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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