The Financial Conduct Authority (FCA) has warned it is to take action against GI firms failing to implement the new rules around renewal transparency.
The watchdog has found that some companies are still failing to properly implement the rules despite a warning from the FCA in October last year.
The rules, aiming to increase transparency and encourage shopping around at renewal time, which were proposed in 2016, were introduced in April 2017.
The regulator stated that they require firms to clearly show the premium a customer paid last year alongside the proposed renewal premium.
It added that according to the rules firms need to show a “prominent, clear and straightforward message” to encourage customers to shop around.
According to the regulator, RAC has become the latest company found to be failing to comply with the regulations. The RAC has agreed to contact affected customers.
The regulator noted it had found that the firm was failing to display the prior and current year premium and the shopping around message as key information in its breakdown policy renewal documentation.
In June 2017, the FCA ordered Admiral to contact all affected customers after it had found that the insurer had included inaccurate premium amounts in renewal document issued to some customers.
Compliance experts then explained that if policies are sold through brokers it is the broker’s responsibility to check that their client’s cover remains competitive and that the last year’s premium is displayed correctly.
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.”
He continued: “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.”
In October 2017, the regulator highlighted that firms were failing to meet the rules in the following areas:
- 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.
It added that it expects firms and senior management in those firms to take immediate action to ensure they are compliant.
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