In our consultation on general insurance pricing practices, CP20/19[1], we proposed that firms would have 4 months to implement any rules that we might make. Following feedback, we propose to amend this timetable to give until the end of September 2021 for the systems and controls rules and the product governance rules and until the end of 2021 for the pricing, auto-renewal and reporting requirements. In reaching this decision, we have sought to balance ensuring firms have sufficient time to put the changes into effect and acting quickly to address consumer harm.
We received over 100 responses to the consultation, which closed on 25 January 2021. Many respondents commented on the proposed implementation period, with almost all firms saying that it would not be possible for them to meet this timetable.
Firms told us that the package of remedies on which we consulted would require significant operational and business-wide changes. These include developing and testing new pricing models and re-coding IT systems. These changes cannot be delivered in a short period, while firms are working under significant pressure dealing with the impacts of the coronavirus pandemic.
We have not yet reached a final decision on the details of any rules we might introduce, but we are making this announcement now so firms can plan their change programmes effectively.
We will publish the policy statement, and any rules we make, at the end of May. The implementation period will start from this point.
If any rules are made, we propose to give firms an implementation period of until:
- the end of September 2021 for the systems and controls (SYSC) rules and product governance rules (in Annexes B and D of the draft Instrument on which we consulted) and
- the end of 2021 for the pricing and auto-renewal remedies and the reporting requirements (in Annexes C and E of the draft Instrument)
We expect firms to implement any rules that we introduce on or before the proposed deadlines. We will check they are on track and are moving promptly to implement any final rules. To that end, we will closely monitor how firms implement their change programmes and will be checking their progress regularly.
We do not want to see consumer harm continue into 2022 and have a range of tools and powers available to us. We will consider taking action against firms where there is evidence that they have not taken sufficient steps to implement the rules by the implementation date, including action to ensure they take appropriate steps to repair any harm that arises, especially financial loss to consumers.
The pricing rules would apply to renewal notices sent after the rules take effect (rather than to policies renewing after the rules take effect). As renewal notices are sent some time before policies renew, this means firms have the full implementation period to make the necessary changes to their business models.