Insurance firms still getting new shopping around rules wrong, says regulator
Insurance firms are still failing to put rules introduced a year ago to help customers shop around properly into place, the City watchdog has said.
The Financial Conduct Authority (FCA) warned it will take action against general insurance firms who fail to properly implement the rules introduced to increase transparency and encourage shopping around at renewal time.
Some consumers may have lost out due to firms failing to get the rules right, the FCA said.
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.
But the FCA said it has found that firms are still failing to properly implement the rules despite warning in October about failings.
The regulator said 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 documents.
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."
In October, the FCA said areas where it had found firms were failing included:
- Not putting the new rules into place for all products and customers;
- Getting previous premiums wrong;
- Leaving out the shopping around message or not presenting it in a way which draws the customer's attention;
- And failing to properly identify all customers who needed renewal information either because of system error or a mistaken interpretation of the type of customer included in the new rules.
The FCA said it expects firms and senior management in those firms to take immediate action to ensure they are compliant.
It said any customer who feels that they did not receive the correct information from their insurance firm should contact them in the first instance.