FCA has published a suite of portfolio letters for the insurance markets, off the back of its value measures data report, but covering its wider supervisory priorities. The letters note the importance of the insurance market to UK customers, and highlight areas in which FCA has taken action for failings over the past year. These include:
- continued sale of products that do not provide fair value
- paying away significant amounts of commission to third parties where it is not clear how these are fair value
- discriminatory pricing practices
- weak identification of vulnerable customers
- long waiting times.
FCA has set market wide priorities, of
- setting and testing higher standards – specifically in embedding the Consumer Duty, governance and culture and minimising the risk of operational disruption;
- reducing and preventing serious harm – specifically through improvements in the oversight of Appointed Representatives .
Additionally, it has set sector priorities for each part of the insurance market. For personal insurance, it continues to focus on fair value, and on putting consumers’ needs firs in customer support and claims. It has also noted that firms can improve consumer access to products and can improve their sales processes in some respects – it highlights that in certain products, “essential” cover is offered for a lower price, but consumers may not realise that this means coverage under those policies is lower than they may be used to.
FCA says a significant part of its activity over the next 2 years will be in testing firms against its priorities and expectations and identifying outliers.