The Financial Conduct Authority (FCA) has warned it will take
action against general insurance firms who are failing to
properly implement rules introduced to increase transparency and
encourage shopping around at renewal time.
The rules, introduced in April 2017, require firms to clearly
show the insurance premium a customer paid last year alongside
their proposed renewal premium. They also require firms to show a
prominent, clear and straightforward message to encourage
customers to shop around. The FCA has found that firms are still
failing to properly implement the rules despite warning in
October about failings.
RAC has become the latest firm to agree to contact affected
customers after the FCA found that the firm was failing to
display the prior and current year premiums, and shopping around
message as key information in its breakdown policy renewal
documentation.
Jonathan Davidson, Executive Director of Supervision – Retail and
Authorisations at the FCA said:
“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. 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 outlined in October 2017 how firms were failing to meet
the rules, highlighting four particular areas where it found
firms were failing. These were:
- 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 that is captured by
our rules.
The FCA expects firms and senior management in those firms to
take immediate action to ensure they are compliant.
Any customer who feels that they did not receive the correct
information from their insurance firm should contact them in the
first instance.
