What firms should take from the FCA's latest portfolio strategy letter
The FCA has issued a new warning to home and motor insurers to improve their treatment of vulnerable
The FCA has issued a new warning to home and motor insurers to improve their treatment of vulnerable customers, as well as their handling of claims, following an increase in complaints regarding the quality of insurance services.
In its statement, the regulator also cited concerns over rising instances of customers being offered less than their car’s fair market value after it had been written off.
The announcement comes after Direct Line Group were found to have underpaid clients whose cars had been written off following an FCA investigation.
Consequently, the regulator has ordered the insurance firm to conduct a review of total losses over the past five years to “identify any policyholders who received unfair settlements and provide them with appropriate redress”.
The FCA has now confirmed it will be taking similar swift action against businesses found to have broken its rules. It has also finalised new guidance for insurance firms on how best to support their customers.
The move forms part of a package of measures intended to assist customers through the cost-of-living crisis – and supports the regulator’s ongoing strategy to deliver better outcomes for consumers and improve standards across the UK’s financial services industry.
Reiterating the FCA’s commitment to enforcing its customer support expectations, Executive Director of Consumers and Competition Sheldon Mills noted: “Where we found issues, we’ve told firms to put them right. We’ll be monitoring them to ensure they do.”
Read the FCA’s full press release here.
TCC is helping firms with a number of engagements relevant to this topic – many of which have overlap and common risks.
For example, an important aspect of Consumer Duty is ensuring Product Design and Product Governance encompass the risks associated with manufacturer, design of fair terms and conditions, target market, distribution and measurement of product performance against expectations.
The FCA has consistently stated over the last several years that products must perform as reasonably expected by consumers. And certainly, poor claims and complaints outcomes would lead a firm to question if this was occurring. Indeed, the Consumer Duty’s Consumer Support outcome requires that your after-sales support should be as robust, frictionless and responsive as pre-sales interactions.
A common Key Risk Indicator is whether claims patterns indicate that customers don’t understand key contract terms – such as interpretation of ‘reasonable care’ clauses.
Another important challenge to good customer outcomes is an ability to not only react, but also attempt to predict, where customers may suffer temporary or permanent vulnerability.
TCC are working with firms on maximising their MI and customer interaction oversight, alongside optimising other systems and controls, to effectively and consistently achieve this objective.
For more information on supporting customers at risk of financial difficulty, check out our other resources:
Four steps for mortgage lenders to deliver good customer outcomes
Why mortgage providers should be reviewing their compliance and focusing on resolving issues now
The need for mortgage providers to deliver good outcomes for customers facing financial difficulty