Improving protection for insurance customers
The Financial Conduct Authority (FCA) has warned insurance companies that customers could be paying excessive prices, purchasing inappropriate products or receiving poor service due to distribution practices.
The full FCA report can be downloaded here: General Insurance Distribution Chain.
What the FCA found
The FCA conducted two simultaneous reviews of the general insurance (GI) sector; 1) looking at the GI distribution chain and 2) outsourcing arrangements. They discovered:
- Customers paying potentially excessive prices due to parties in the chain receiving remuneration, which appeared to significantly exceed the costs incurred in distributing the products. This was most prevalent where insurance was linked to another non-financial purchase, such as a car or a holiday.
- Customers buying potentially unsuitable products, due to issues with either the distribution or sales approaches in place.
- Customers not receiving the services they needed and experiencing poor outcomes, for example when making claims or complaints. This was most common where firms delegated authority to another party.
How is Car Care Plan responding?
The FCA has advised all GI firms to consider their report, guidance and expectations carefully, to identify how the findings apply to them and take appropriate actions immediately to mitigate any issues identified.
We encourage all our partners to read the FCA’s full publication, which highlights their concerns in relation to customer harm. We are also assessing the information to agree any necessary corrective action which may be required to safeguard customer interests, as well as meeting the regulatory body’s expectations.
We are confident that by working in partnership, our industry can implement the required changes in line with the FCA’s expectations.