Insurance companies stand accused of “marking their own homework” and relying solely on internal approaches to introducing the FCA Consumer Duty.
Insurance market insight firm Consumer Intelligence has levelled the charge, saying companies must focus on industry-wide benchmarking to ensure compliance. It adds that understanding performance in the context of the wider market will help companies test internal assumptions, prioritise areas for improvement, boost competitiveness and demonstrate their commitment to delivering high standards for customers.
The Financial Conduct Authority’s Consumer Duty, which will be in force from 31 July, aims to increase consumer protection and promote fair practices in financial services. It sets out four main outcomes:
- Customers should receive fair prices and quality products
- Customers should expect suitable products/services and good treatment
- Customers should have strong confidence and participation in markets
- Companies should ensure they meet diverse consumer needs.
The duty also requires companies to act in good faith towards customers, avoid foreseeable harm and support them in their financial objectives.
"It’s disconcerting how many insurers have blinkers on,” said Catherine Carey, head of strategy at Consumer Intelligence. “At the very least, these firms risk scrutiny from the FCA as a result. Without access to the whole-market view, they could be prioritising efforts in the wrong places, potentially leaving their performance exposed in other areas.”