FSA cuts back on detailed insurance selling rules but tightens up where customers are not being treated fairly
18th December 2007The Financial Services Authority (FSA) today published its new Insurance Conduct of Business sourcebook (ICOBS) which sets out the standards and requirements for general insurance firms on how they deal with their customers.
Dan Waters, FSA Director of Retail Policy and Themes, said:
"ICOB is another important achievement in more principles-based regulation. We have greatly simplified our rules in areas of general insurance markets where outcomes for consumers are generally good. In a few areas, however, like payment protection insurance (PPI), we have responded to continuing market failures and consumer detriment by introducing carefully targeted rules to help ensure that consumers achieve a fair deal."
For products such as household, motor, pet and private medical insurance where markets are generally working well the emphasis is on high-level rules, except where detailed provisions are required by EU Directives or are the only practicable way to protect consumers. While this will mean more flexibility for firms the FSA will require the same standards of conduct and essential consumer safeguards remain.
The new rulebook targets additional rules at areas of consumer detriment, in particular improving selling practices for protection products (critical illness, income protection, term assurance and PPI). Some of these new measures will apply to all protection products including a new standard to ensure better oral disclosure of key information about policies to help consumers make informed purchasing decisions.
There will be a stronger framework of rules to back the FSA's drive to improve selling standards in PPI markets. As well as oral disclosure, this includes increasing the existing cancellation period of 14 days to 30 days and a new rule requiring firms to establish that customers would be eligible to claim benefits.
The new general insurance regime will come into effect on 6 January 2008 with firms being allowed a six month transitional period for implementation. All firms are expected to meet the required standards by 6 July 2008.
