The Financial Conduct Authority (FCA) in the UK has warned general insurance firms that many are neglecting to consider the value of the services and products that they sell to consumers. According to the FCA, general insurers are approaching manufacturing, sales and distribution in such a manner that customers often end up buying products that are not appropriate for their needs, dealing with substandard service and paying through the nose.
“Through our recent work, we have continued to see poor manufacturing, sales and distribution approaches leading to sales of low value and inappropriate products, unfair treatment of claims and service issues,” commented Jonathan Davidson, the FCA’s Executive Director of Supervision – Retail and Authorisations. “The widespread extent of these issues demonstrates a culture which pays insufficient regard to customer outcomes in some parts of the general insurance sector. We are going to carry out further supervisory work to make sure that firms meet their obligations and will not hesitate to use the full range of our regulatory powers.”
The FCA has warned general insurers that those who fail to observe the recently implemented Insurance Distribution Directive and Senior Manager and Certification Regime – which respectively mandate that all entities within the general insurance distribution chain approach business with the customer’s best interests in mind; and that senior managers are fully accountable for any action undertaken by their firms – will be pulled up on any lax behaviour. The organisation says that it will not hesitate to intervene with both firms and senior managers, where required.
While the FCA admits that progress has been made since the last reports it published about failings within general insurance distribution chains, it warns that there is still a great deal of potential for poor outcomes for consumers. Insurers should take note – there is nowhere to hide …