The Financial Conduct Authority has warned insurers and advisers about potential regulatory action amid concerns that some providers are failing to fully meet new Consumer Duty rules.
These warnings follow a thematic review of the Consumer Duty regulations that came into force just over a year ago. The FCA expressed specific concerns that some insurers were failing to show how products offered ‘fair value’ to consumers, or demonstrating that they deliver fair outcomes. The FCA said that where material concerns persisted it could force insurers to withdraw products from the market. It added that it will require some firms to take remedial actions to address issues it had identified.
Consumer Duty rules were introduced a year ago, with the second phase, relating to existing rather than new sales, coming into force at the end of July this year.
The FCA said that the Consumer Duty had led to improved governance and oversight of how products are designed, managed, reviewed and distributed. However it adds that there remained some issues to address.
Publishing the review the FCA said: “We’re disappointed to see many insurance firms are not fully meeting their product governance obligations.”
FCA said it analysed information from 28 manufacturers and 39 distributors covering 10 different general insurance and pure protection products. While Consumer Duty rules specifically relate to retail products many insurers will be adopting the same standards their group health and protection products.
Matt Brewis, director of insurance at the FCA added: “Insurers need to make sure their customers are getting fair value. Progress is being made, but we are still seeing too many examples of insurers and brokers lacking the right information, governance or oversight to ensure their customers get consistently good outcomes.
“All insurance firms should take note of our findings and make improvements where appropriate.
“We’ll continue to take action where we see poor value so consumers can have confidence when buying insurance products.”
