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The FCA warned as it launches yet another review

A senior executive at UK composite insurer Aviva has warned the UK's nascent Financial Conduct Authority (FCA) to "really think about proportionality and priority-setting".

"New regulatory bodies tend to be keen to solve everything," Robin Spencer, CEO of Aviva's UK & Ireland general insurance unit, told the Association of British Insurers conference on 9 July.

The comment came shortly after the FCA announced yet another review into the UK insurance market, this time focusing on personal insurance that is offered as an add-on product to customers buying cars and holidays.

The regulator, which replaced the Financial Services Authority in April, has now launched at least seven reviews into the insurance sector, looking at areas such as mobile phone cover, renewal pricing, motor legal insurance and brokers' potential conflicts of interest.

The latest review will examine whether the market for "add-on" insurance such as warranties or travel cover is competitive, and whether consumers understand these products before they buy them.

Spencer warned the FCA not to go too far, adding there was a risk that insurers could withdraw products.

The FCA's chairman John Griffith-Jones said that insurance products would have meet a genuine need, and noted that this was one of four tests that insurers, including commercial insurers, had to pass.

However, the Aviva executive criticised the idea, adding that while he may not need mobile phone insurance, for example, a 14-year-old teenager might.

Griffith-Jones said there also needed to be sufficient transparency, and that insurers would have to treat customers fairly during the claims process. He also said products should only be sold to people with a genuine need.

He added that the four criteria were "equally directed" at commercial insurers, adding that there was "a potential for abuse there".

Spencer said he was seriously worried that the current regime placed all the burdens on the financial industry, rather than consumers.

He added that the FCA should work proactively against fraud alongside the insurance industry.

Griffith-Jones said he agreed the FCA should work alongside business, but said it should not be perceived as being "in the pocket of the industry", as that would destroy trust.

He said the FCA did not amount to just a colour and a letter change, as it was "a new body with a new way of doing things".

Speaking 100 days after the launch of the FCA, its CEO Martin Wheatley echoed the remarks, saying that the body would be wholly different from its predecessor.

"We're not just asking: is this product compliant? Does it tick every legal box? But actually, is the outcome good? Is the market competitive? And is fair treatment of consumers designed into products and culture?" he said.

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