To: Steve White, High Street Firms Division, FSA From: Stephen Walker, regulation liaison officer, ...
To: Steve White, High Street Firms Division, FSA
From: Stephen Walker, regulation liaison officer, AMII
This open letter has been drafted following a PMI industry roundtable to discuss CP187 – Insurance selling and admin-istration & other miscellaneous amendments. The roundtable was attended by representatives from PMI insurers, inter-mediaries and other trade bodies, and reflects the general views and concerns that were expressed during the meeting.
It was felt there was still a great deal of work to be done and that this should not be underestimated. There was concern that smaller inter-mediary firms may have diff-iculty in understanding what will be required of them to reach and maintain compliance under FSA regulation and it was felt that time should be spent considering how firms are going to comply with the new regulatory requirements.
Summary of the main areas of concern from a PMI perspective:
• Chapter 4 – Customers and products: A 21-day notice period for renewals for commercial customers is not sufficient time for an assessment of the renewal offer to be made by the intermediary and then the customer. An extension to 35-42 days was considered to be more realistic.
• Chapter 5 – Status disclosure: There should be a require-ment to state on whose behalf an intermediary is acting (the insurer's or the customer's).
• Chapter 6 – Advising and selling standards: demands and needs can only be assessed on the information provided by the customer. Many customers do not know, initially, what they want from a PMI policy. There is a need for quality not quantity information. Advice can only be given based on the information provided by the customer. It was felt there should be a requirement in 4.4.5 G (CP187) to give 'best advice'. There is concern that for some larger organisations, information cannot be sourced from one computer by another based in a different location. This situation needs to be addressed.
• Chapter 7 – Financial pro-motions and product dis-closure: There are concerns regarding the volume of information the customer is required to receive. Too much information can be as confusing as too little and can result in inconsistency of information provided, resulting in public criticism and Ombudsman involvement.
• Chapter 11 – Complaints: There are concerns regarding vexatious claims and the potential costs involved. 92% of complaints received by GISC have been in the £0-£50 band. This is regarded as a full-blown issue that requires a workable solution. FOS case fees should be proportional to the size of firm. Levies should be set at different levels for the different industry sectors to reflect their individual claims histories.
