FSA Calls For Improvements In General Insurance Disclosure

by Robin Pilgrim, LawAndTax-News.com, London

20 October 2005

A survey conducted by the UK's Financial Services Authority, the results of which were published this week, has found that many insurance companies are not yet fully complying with FSA rules on the provision of disclosure documents to customers.

The work involved reviewing the content and format of more than 100 policy summaries and Key Facts documents for motor, household, critical illness, income protection and other types of general insurance.

According to the FSA, a key focus of the review work was on the appropriateness, prominence and clarity of significant and unusual exclusions, given the potential for consumer detriment in this area.

Problems identified by the financial regulator with policy summaries and Key Facts documents included:

• Poor quality of style and presentation, making it difficult for customers to read and understand the documents;
• Not all the required information was included. For example, the cancellation period was frequently omitted from the policy summaries;
• Significant and unusual exclusions either omitted or not given due prominence;
• For some products the description of the product was frequently too complex or obscurely worded to be meaningful to a customer.

Clive Briault, FSA Managing Director of Retail Markets, explained that:

"Providing consumers with simple, clear and understandable information about products is a key part of our general insurance regime. It is true that the industry is still getting to grips with the new regime but these findings are worrying and we are expecting to see a marked improvement over the coming period."

"We will feed back to firms the detailed findings of the survey to help them improve the quality and clarity of disclosure documents and to ensure that the required material is included as specified by our rules. The feedback will include examples of good and bad practice. We will continue to monitor quality and, if it is found that some firms continue in these failings, appropriate action will be taken, including enforcement action if necessary."

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