CII London Market 1 (LM1) Insurance Essentials Practice Test 2025 - Free LM1 Practice Questions and Study Guide

The role of the Financial Conduct Authority (FCA) in the UK insurance market primarily involves regulating financial firms to ensure they treat customers fairly. This regulatory body is responsible for establishing rules and guidelines that aim to protect consumers, enhance competition, and maintain the integrity of the financial markets. By overseeing how insurance companies operate, the FCA encourages practices that ensure consumers are afforded appropriate information, protections, and recourse if things go wrong.

This focus on fair treatment encompasses aspects such as ensuring transparency in communications, monitoring pricing practices, and evaluating claims handling processes to uphold consumer rights. Thus, the FCA's regulatory framework is designed to ensure that insurance firms prioritize their customers' interests, promoting trust and confidence in the insurance sector.

The other options do not align with the FCA's responsibilities: setting premium rates is not within the FCA's remit, providing insurance directly to consumers is the role of insurers, and while the FCA may indirectly support investment by fostering a healthy market environment, promoting investment is not a direct function of its regulatory duties.