Modern Insurance Magazine Issue 62

INTERVIEWS
involve the FOS so much moving forward.
The FCA are predicting a short-term spike
in complaints as the new regulations settle
in, followed by a reduced number once the
new Consumer Duty hopefully starts to
mitigate issues for potentially vulnerable,
high risk or dissatisfied customers.
Ultimately, it’s up to the FCA to step
up and enforce these new rules, and on
behalf of consumers, we want to see real
penalties for those who do not comply.
Which? was extensively
involved in consultation as the
Q new Consumer Duty was being
developed. Tell me more about
this process, and what was
involved.
A
Indeed, our Policy Team worked
really closely in consultation with
the FCA to form the basis of the
new Consumer Duty through regular
discussions and collaboration. We’re very
much in support of it now; admittedly,
there was some concern at first around
the width of ambition behind the new
regulations, but we clearly see the FCA’s
commitment and dedication to industry
reform. It supports a lot of what Which?
is all about, the idea of fair treatment as
default.
On that topic then, how are
Which? hoping to raise awareness
Q of the new Consumer Duty in
order to educate insurance
customers about their rights
moving forward?
A
I’m sure we’ll be writing frequently
about the Consumer Duty as these
new regulations take hold. Where
we identify insurers or those within the
distribution chain that don’t comply, we’ll
also be referencing the Consumer Duty
and highlighting where a particular insurer
has fallen short of their obligations. From
the perspective of our readership, we
need to keep reminding them that the
Duty exists for their benefit. Insurance
is a topic that we cover in each issue of
Which? Money magazine, so of course we
need to cover the Consumer Duty as part
of our commentary.
We also cover complaints to insurers in
our various online guides. Currently,
these address the process of
making and escalating a
complaint, but I’m sure we’ll
be building on this advice
with more focus on the
Consumer Duty moving
forward.
Ultimately, however, rules
are for providers to follow.
It shouldn’t fall on the
consumer to adopt the
endless role of identifying a
lack of compliance; that job
falls to the regulator, and
also to us to a slightly lesser
extent. Of course we want
our readership to understand the basics,
but in this case, compliance falls firmly on
the shoulders of those responsible.
What impact might the new
Consumer Duty have on the
Q number of complaints in the short
and long term?
We’ve already touched on this
slightly, in that I know the FCA
A were expecting to see an initial
spike in the number of Consumer Duty
complaints before reaching an eventual
plateau. On the other hand, the FOS have
said that they can already judge the level
of complaints based on reasonable, fair
standards, so they don’t seem to predict
the same upturn.
I don’t foresee an immediate change in the
short term either, but time will tell. We’ll
still continue to refer people through to the
FOS and see how things go. Sometimes
there are delays, and if this happens, we’ll
work with them to find another way of
handling volume.
Q
More generally speaking, how long
do you think it will be until we see
a major shift in consumer trust and
confidence?
Some of the issues we’re seeing
have been around for years. We’re
A working on an editorial piece at the
moment looking into the standards of loss
adjusters in home and property claims,
and I suspect that issues in this area of the
industry will take a fair while to rectify. If
inflation starts to come down next year,
it will also be interesting to see whether
premiums fall as a consequence.
With dreadful savings account interest
rates, for instance, we saw politicians get
involved and the issues are being rectified
quickly. Unfortunately, I’m not sure that
the same can be said for insurance. Bad
behaviour has a habit of living on in the
memory of consumers for a while - not so
much related to General Insurance per se,
but I do think people are going to be very
cynical about the industry for quite a long
time to come.
Car insurance is another great example.
It’s still a grudge purchase and not a
much-loved product, and yet it has higher
payout rates than many other lines of
insurance at around 99%. We’re dedicated
to making sure that consumers obtain a
product which actually works, especially
when there are so many other cost-ofliving
pressures at the moment. We need
to see insurers offering fair value at a fair
price.
QFinally, looking ahead, what
research will Which? conduct in
future to assess the efficacy of the
new Consumer Duty in insurance?
AWe’ll continue to take a balanced
approach by conducting deep
research into the policy side of
the new Consumer Duty, one that informs
regulators and other governing bodies.
We also have the editorial side, which
informs consumers. Every year, we run
Customer Satisfaction surveys for car
and home insurance, sometimes for pet
and travel insurance as well. We also pay
very close attention to General Insurance
Value Measures, and submit a number of
Freedom of Information requests to the
FOS to ‘name and shame’ when we’re
investigating specific complaints further.
I think we’ll follow a similar approach for
matters related to the Consumer Duty, as
insurance is now one of our priority areas.
We’re particularly interested in pricing,
and how insurers are coming up with
their prices in an ethical, fair and balanced
way, particularly in light of increased
automation within the underwriting and
risk assessment process.
Sam Richardson,
Deputy Editor, Which? Money
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