WHAT’S ON THE RADAR?
The CII takes a look at what’s new on the policy and public affairs front this month.
Speculation around Brexit continues to be rife, with the likelihood of a constitutional showdown between the government and parliament in October increasing. The Financial Conduct Authority’s (FCA) guidance for UK insurers stresses that a disorderly Brexit should not be used as a reason for not paying claims (around travel delays, for example), “where it would be unreasonable to do so in the circumstances, including how clear the relevant provision was to customers”.
It goes on to say: “You should be aware that consumer rights legislation makes clear that where there is ambiguity in a consumer contract, it will be given a meaning favourable to the consumer.”
TREASURY SELECT COMMITTEE –FCA PERIMETER OF REGULATION
The Treasury Select Committee has published a report on the regulatory perimeter, saying it is “confusing for consumers of financial services, whether they be individuals or small businesses”. It adds: “In fact, that lack of understanding may well be preyed on. Some firms may also deliberately game the perimeter to undertake regulatory arbitrage.”
This has implications for all sectors of financial services that are on the borders of FCA regulation. For example, it covers unregulated investments and warranties that are not classed as insurance. The FCA plans to respond to these concerns by updating its guidance on the perimeter, publishing an annual report, through ongoing supervision and enforcement action, and by working with agencies, consumer groups and the industry to improve consumers’ understanding protections that are available.
FCA AND PRICING POLICY
The FCA published a feedback statement in July that set out its strategic approach to tackling pricing issues. This high-level approach will dictate how the FCA sets about insurance-specific issues such as renewal pricing and the fair treatment of existing customers.
One key issue was whether pricing should be viewed from a purely economic perspective, solely in terms of creating efficient markets, or if the FCA should take wider concerns from society as a whole into consideration. The FCA concluded that is should exercise “judgement using a transparent and objective framework”.
However, it went on to say: “We do think that society’s view of the pricing practice is important not only because we regulate in the public interest, but also because if consumers believe particular pricing practices are unfair, then there could be damaging effects on trust in markets and institutions.”
FCA GUIDANCE ON VULNERABLE CUSTOMERS
In July, the FCA published guidance on the treatment of vulnerable customers. It said: “Most firms want to do the right thing and have made significant progress in how they treat vulnerable consumers. There is still room for improvement and for a greater degree of consistency across financial services sectors.”
One key area for action was in the training of client-facing staff, to recognise different forms of vulnerability, to communicate properly and to “exercise extra skill, care and diligence” when serving vulnerable clients. The FCA made it clear that understanding vulnerability is a key element of compliance, with its Training and Competence Sourcebook.
The EU General Data Protection Regulation (GDPR) will apply in the UK from 25 May 2018. It is an essential step forward in enhancing the privacy and security of personal data.
The UK Financial Conduct Authority’s (FCA) priorities for the year reflect the high level of resource needed for Brexit, given its impact on regulation and financial services.
The FCA has issued the first of a series of consultation publications which form part of its mission.