Designated Professional Body Scheme for General Insurance Distribution (UK)

The RICS Designated Professional Body scheme is a UK regulatory programme approved by HM Treasury, the UK’s ministry of finance. It enables us to regulate our members for general insurance distribution activities in the UK, on behalf of the Financial Conduct Authority.

All firms and professionals engaged in general insurance distribution activities in the UK should read these rules and their accompanying guidance carefully. It is important to understand and have thorough, detailed knowledge of both documents.

RICS Compliance Notice - Commissions earned as a Designated Professional Body (DPB)

This compliance notice is a reminder of the rules and guidance about commissions earned under the firm's DPB licence to provide general insurance distribution activities. It sets out the key issues and risks which you should be aware of as a DPB licence holder and regulated firm.

DPB Rules and Guidance

RICS is a Designated Professional Body (DPB) under the Financial Services and Markets Act 2000 (FSMA) and the Designated Professional Body Rules regulate the carrying on DPB Regulated Activities by those licenced by RICS under the Designated Professional Body Scheme. The Guidance for the Designated Professional Body Rules accompanies the Rules and provides information to assist RICS-regulated firms and members in complying with the regulatory requirements of being licensed through the RICS DPB scheme.

In the Designated Professional Body Scheme (DPB) Important Information, Guidance and Help Sheets RICS-regulated firms and members will find a significant amount of guidance on the requirements and obligations carry on those activities.

Only RICS-regulated firms can join the RICS DPB Scheme and obtain a DPB Licence. Please see Applications for more information on obtaining a DPB Licence or registering with RICS.

What concerns are we seeing?

We regularly undertake regulatory review visits at firms to check their compliance with the rules and guidance (see here for more details).  We have identified concerns arising where RICS-regulated firms pay commission into their office bank account without having written informed consent from clients.

There is a requirement under paragraph 49(a)(v) of the Guidance to the Designated Professional Body Rules 2018 that firms obtain informed consent in writing from the client before retaining any commission earned from services provided under their DPB licence. Prior to consent being obtained or the monies being remitted to the client, commission should be held in the firm's client bank account.

The regulatory review visits have identified occasions when firms have retained thousands of pounds which they were not entitled to. We expect firms who have retained commission without written informed consent to pay the monies into the firm's client bank account and either remit it to the client or obtain consent to retain it.

What are the risks?

There are a number of risks for RICS-regulated firms who do not comply with this requirement under the DPB Rules:

1. The firm may face financial difficulties when rectifying the position and complying with the requirements by paying the commissions into the firm's client bank account or remitting them to the client.
2. The firm is likely to be in breach of Rules of Conduct where they must be honest, act with integrity and comply with their professional obligations, including obligations to RICS. This could lead to disciplinary action (including against individual members).
3. The firm may be subject to a temporary suspension or conditions or face having their DPB licence suspended or withdrawn.

How can firms put things right?

If you are concerned that your firm may not have obtained written informed consent on commission earned under their DPB licence, you should take immediate action to avoid disciplinary action. You should take the following steps:

1.  Make a schedule of all commission earned since the firm's licence was granted.
2. Check whether written informed consent has been obtained on each commission. This means that the client must know the amount of commission earned and agree that the firm can retain that commission.
3. On all commissions that have been retained without written informed consent, pay the monies to the firm's client bank account.
4. Either obtain written informed consent to retain the commission or remit it to the client.

It is a requirement to keep a record of all commission earned, the amount and the date on which written informed consent was obtained.

Further assistance

If you are unable to complete the steps above, you need to report this to us using the form below.

We recommend that you contact us by email as the Contact Centre is likely to have high volumes of calls due to membership subscriptions being due, and the deadline for completing Continuing Professional Development (CPD) approaches.

Applications

In order to join the RICS DPB scheme, you will need to have an RICS regulated firm.

If you need to register your firm, follow the instructions on the Register your firm page where you can complete the DPB application as part of your firm’s registration

If your firm is already 'Regulated by RICS', you will need to complete the DPB Application through the Professional Portal.  Log in to your account and select the Regulation section.
You will need to download the 'Shareholders and Close Links' information' and upload it to the Professional portal as part of your application.

At the application stage you will be requested to provide information on:

• training and development of relevant staff that relates to the undertaking of insurance distribution activities
• the good repute of the firm
• professional indemnity insurance cover
• client money protection
• information on holdings of shareholders, or close links, that could affect our supervisory functions.

Licensing

Once your application has been submitted, a caseworker will review your response to the questions. When the application has been approved an invoice will be issued for the application fee. When this has been paid a licence will be issued to you. You cannot rely on the licence until the fees have been paid.

If you wish to join the DPB scheme and are currently directly authorised by the FCA then you should begin the FCA cancellation process. Once this has been completed with the FCA , you can apply for a DPB licence.

If your firm no longer conducts DPB Regulated Activities, please send a copy of the Designated Professional Body Licence – Surrender Application Form to regulation@rics.org.

Find out more about regulation