The impact of the FSA's involvement should be minimal and the quality of cash plans should increase in the long run, writes Helen Wallis
So far as the speculative involvement of the Financial Services Authority (FSA) is concerned within the cash-plan market, it is a positive move for the industry as a whole because formal regulation could provide stability and security for members and future growth in the market.
For healthcare benefits providers, the proposed introduction of the FSA becoming a regulatory body for the industry will not necessarily mean significant changes to the way they conduct their own business and is likely to have a minimal impact, if any.
However, there are a number of companies that currently provide healthcare cash benefit plans that are likely to have to make extensive investment to meet the required standards of the FSA. Indeed, Westfield has recently increased its premiums and therefore attracted additional revenue that may be necessary for future stability to provide for the FSA's demands. For example, a revised IT strategy may have to be introduced and be supported by additional administration processes and the use of professional actuaries is likely to become mandatory.
This extra investment, in turn, may lead to further mergers and acquisitions which could impact the choice of products and services available. This could see the market competing off a more level-playing field and is an opportunity for companies to review their choice of product range to the consumer to make it more attractive to a larger number of potential members. Cash plans are an affordable option for a large proportion of the population at a time when more and more people are looking to personally complement the facilities provided for by the over-stretched NHS themselves. These changes may be overdue and we would certainly welcome their implementation.
Regarding the methods of marketing and selling the plans, the FSA has strict guidelines that companies will be expected to adhere to. However, where those companies are already following a recognised business process, little change in the methodology would be anticipated. The awards 'Investors In People' and 'ISO 9002' are presented to companies who already follow their business processes where such practice ultimately provides security to their investors.
Currently, the majority of medical cash plan providers do not remit 100% of claims costs according to the level of cover taken out by the insured. This is an area the FSA may pay particular attention to when studying the various schemes on offer to the consumer. There may be further restrictions introduced by the Advertising Standards Authority in support of any recommendations governing the content of advertising direct to the consumer.
Although there is still a great deal of speculation regarding the governmental directive giving the FSA regulatory control, the ultimate outcome will probably reduce the actual number of medical cash plan companies, but will increase the quality of product range and benefits available to the consumer.
