The Association of British Insurers has issued a bulletin indicating that regulation by the Financial Services Authority, which officially began on Friday (See IJ Web site Jan. 14), “will build on existing consumer protection.” The new rules replace the industry’s self-regulatory regime, which was overseen by the General Insurance Standards Council (GISC).
ABI Director of General Insurance Nick Starling commented: “While the self-regulatory system worked well, insurers are committed to making the new system a success. We have worked closely with the FSA to ensure that consumers benefit both from high standards of protection and from a competitive market.
“Competition is the best form of consumer protection. It is essential that the new rules do not inhibit innovation. Regulation of sales of general insurance must be proportionate and risk-based. Excessive compliance costs could impact on insurance costs, which would hit consumers.”
The ABI bulletin also noted that while the new regulatory scheme mainly concerns “firms selling general insurance,” it also includes “firms who sell insurance as a secondary activity, such as motor traders.”
The new rules mandate that “sellers must provide clear information about what the policy covers, ensure it meets the customers’ demands and needs, highlight significant exclusions and give cooling-off periods.
“Customers will have the right to appeal to the Financial Ombudsman Service in cases of disputes about the sales process.
“The protection already provided to customers by the Financial Services Compensation Scheme in respect of the insolvency of their insurer is extended to insurance intermediaries’ customers.
“FSA rules implement EU Directives aimed at bringing about a Single Market for insurance.”
Was this article valuable?
Here are more articles you may enjoy.