Contracts, TOBAs & Consumer Duty

10th March 2023


With thousands of businesses reissuing TOBAs to cater for new Consumer Duty obligations, we take a look at the importance of written agreements in B2B relationships and how firms can manage their obligations efficiently. The key objectives of an agreement are:

  1. Clearly defining the terms and conditions of the relationship: A contract establishes the legal framework for the B2B relationship, including the rights and obligations of each party. It can cover areas such as payment terms, data protection, quality standards, and intellectual property rights. This clarity helps to prevent misunderstandings and disputes.


  2. Providing legal protection: A contract can provide legal protection for both parties in the event of a dispute or breach of contract. It can specify the process for resolving disputes and provide a mechanism for seeking damages or other remedies in the event of a breach.


  3. Establishing expectations: A contract can help to establish expectations between the parties. By outlining the specifics of the relationship, the contract can help ensure that both parties are on the same page and have a shared understanding of what is expected.

Building trust: A contract can help build trust between the parties
by demonstrating a commitment to the relationship and providing reassurance that both parties are invested in its success.


A Terms of Business Agreement (TOBA) is a contract between an insurance broker and an insurance provider that sets out the terms of their business relationship. The TOBA outlines the responsibilities of both parties, including the services to be provided by the broker, the commission or fee to be paid to the broker, and the terms and conditions of the insurance policies that the broker is authorised to sell on behalf of the insurance provider.

The TOBA typically includes provisions relating to the broker’s conduct, such as their obligation to act in the best interests of their clients, their duty to disclose any conflicts of interest, and their obligation to maintain appropriate levels of professional indemnity insurance.

In addition, the TOBA may specify any requirements that the broker must meet in order to maintain their status as a representative of the insurance provider. This may include training and development requirements, compliance with regulatory requirements, and adherence to ethical and professional standards.

The TOBA is an important document that helps to establish a clear and transparent relationship between the insurance broker and the insurance provider. By setting out the terms and conditions of their business relationship, it helps to prevent misunderstandings and disputes, and provides a framework for the provision of high-quality insurance services to clients.

A REG Reviews Headers (2)

Yes, it is mandatory for an insurance provider to have a terms of business agreement (TOBA) with an insurance broker, as per regulatory requirements in many countries, including the UK. In the UK, for example, the Financial Conduct Authority (FCA) requires insurance companies to have a written agreement in place with any insurance intermediary who is acting on their behalf, such as an insurance broker. The agreement must set out the terms and conditions of the business relationship, including the services to be provided by the broker, the commission or fee to be paid to the broker, and the responsibilities of each party.


The consumer duty is a new set of rules introduced by the UK’s Financial Conduct Authority (FCA) that requires insurance firms to prioritise the interests of their customers. The duty applies to all insurance products and services provided to individual consumers and micro-enterprises.

The consumer duty requires insurance firms to:

  1. Act in the best interests of their customers: Insurance firms must prioritise the interests of their customers when designing and selling insurance products and services. This includes providing clear and accessible information about the products and services they offer, and ensuring that customers are able to make informed decisions about their insurance coverage.

  2. Take reasonable steps to avoid or manage conflicts of interest: Insurance firms must take reasonable steps to identify and manage any conflicts of interest that may arise when selling insurance products and services. This includes disclosing any conflicts of interest to customers, and taking steps to ensure that they do not unfairly disadvantage customers.

  3. Provide products and services that are fit for purpose: Insurance firms must ensure that the insurance products and services they provide are suitable for the needs of their customers. This includes taking into account the customer’s individual circumstances, and providing products and services that are likely to meet their needs.

Overall, the consumer duty is designed to promote greater transparency and accountability in the UK insurance industry, and to ensure that insurance firms are putting the interests of their customers first.


Insurance companies may need to change their terms of business agreements (TOBAs) in response to the new consumer duty rules. The consumer duty requires insurance firms to prioritise the interests of their customers, and this may require changes to the way that insurance products are designed and sold.

To comply with the consumer duty, insurance companies may need to update their TOBAs to reflect the new rules and ensure that their business practices are aligned with the interests of their customers. This may include changes to the way that products are marketed and sold, as well as changes to the way that commissions and fees are disclosed and managed.

In addition, insurance companies may need to review their existing TOBAs to ensure that they continue to comply with other regulatory requirements, such as the Insurance Distribution Directive (IDD) and the General Data Protection Regulation (GDPR).

Overall, the introduction of the consumer duty is likely to have a significant impact on the UK insurance industry, and insurance companies will need to make changes to their business practices and TOBAs to comply with the new rules and prioritise the interests of their customers.


Convenience and speed: enable parties to exchange and sign contracts remotely, without the need for physical documents or in-person meetings. This can significantly reduce the time and effort required to execute contracts, as well as improve the speed of transactions. Making the process streamlined creates a positive experience for your trading partners while you benefit from:

  1. Cost savings: help to reduce the costs associated with printing, mailing, and storing paper documents. This can be particularly beneficial for businesses that handle a large volume of contracts or operate across multiple locations.
  2. Security and authenticity: provide enhanced security and authenticity features, such as digital encryption, electronic audit trails, and multi-factor authentication. This can help to reduce the risk of fraud, forgery, and unauthorised access to confidential information.
  3. Improved tracking and management: provide improved tracking and management features, such as real-time updates on contract status, automated reminders for deadlines, and centralised document storage. This streamlines the contract management process and reduces the risk of errors or delays.
  4. Environmental sustainability: reduce the environmental impact of paper-based contracts, such as reducing paper waste, reducing carbon footprint associated with shipping, and contributing to eco-friendliness.

Digital contract exchange and signature offer several benefits that can help businesses to save time, reduce costs, improve security, enhance contract management, and promote environmental sustainability.

This article was published by:

Article author:

Paul Tasker

Paul Tasker is the CEO at REG Technologies. An insurance market veteran Paul is passionate about disruptive technologies and innovations that can drive growth, reduce risk and enable businesses to thrive.

020 3946 2880

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