The heat is on for insurance companies – if you’re not implementing the Financial Conduct Authority’s (FCA) rules then you are likely to see action taken against you.
The regulator has this morning warned it will take action against general insurance firms that “fail to properly implement rules introduced to increase transparency and encourage shopping around at renewal time.”
The warning refers to its rules, introduced in April last year, that outlined firms must clearly show the insurance premium a customer paid last year alongside its renewal premium. It also means firms must show a straightforward message that encourages customers to shop around.
According to the FCA, some firms are still failing to implement these procedures despite its warnings. In particular, it pinpointed RAC as the latest firm that has agreed to contact affected customers after the regulator determined it was failing to display prior and current year premiums.
“It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules,” said Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA. “Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.
“We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent. As we said in October, we expect other firms to take notice of these issues, to look at what they are doing and to make sure they are getting it right.”
The FCA has highlighted four particular areas where it believes some firms are failing. These are:
- Failing to implement the new rules for all products and customers;
- Misstating the previous years’ premium;
- Leaving out the shopping around message or not presenting it in a way which draws the reader’s attention; and
- Firms failing to properly identify all customers who needed renewal information either because of system error or a mistaken interpretation of the type of customer captured by the rules.