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.
Notes to editors
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[1].