Financial Services Regulation Committee
Wednesday 2nd September 2026
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10:11
Baroness Noakes
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Baroness Noakes
Zero. Welcome to today's meeting, which is the ninth oral session oral evidence session. As part of our inquiry into the Regulation of Consumer Insurance market. And I want to thank Mr. Gill and Mr. Knight from the FCA for attending. The session is open to the public. It's broadcast live and is subsequently accessible via the parliamentary website. A verbatim transcript will be taken of the evidence and will be put on the parliamentary website.
So could I ask you, Mr. Gill and Mr. Knight, to introduce yourselves for the record, and then we'll proceed to questions.
So could I ask you, Mr. Gill and Mr. Knight, to introduce yourselves for the record, and then we'll proceed to questions.
10:12
10:12
10:12
Baroness Noakes
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Baroness Noakes
Excellent. So could we just start with a bit of background of the FCA's regulation of consumer insurance, the consumer insurance market, in terms of how many people are involved in the different activities of regulation, supervision, policy and enforcement, and can within that, can you give an estimate of the proportion of the FCA's resources dedicated to consumer insurance that is, in fact, deployed in relation to travel insurance and home insurance, which are the subjects of this inquiry?
10:12
Speaker 1
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Speaker 1
Of course. Perhaps if I start and then Chris can talk specifically to his department, because that's where the bulk of the activity will take place. The FCA, as you'll be aware, we carry out a number of activities, including authorisation, supervision, policy and enforcement. We also have a competition team who will periodically carry out things like market studies. So the number of people that work on any one particular topic, including insurance, can vary quite significantly at any point in time.
And they are, of course, supported by our economists, our lawyers and so on. So it will flex. We do have a market study underway into the pure protection market. So that's that's being staffed largely by our competition specialists working with Chris's team, but also the lawyers and so on. So as with any topic that we work on, we have a core team in the insurance sector, and then that can be supplemented and that will grow or reduce things like authorisations, depends on the number of firms coming in through the door.
Enforcement will depend on the amount of activity that we've got going on and whether we take enforcement cases. So I'm sure you're aware we've got around six enforcement cases currently live related to insurance and the consumer duty. So there's a fair chunk of people there. But Chris, would you like to talk to your your department in terms of.
And they are, of course, supported by our economists, our lawyers and so on. So it will flex. We do have a market study underway into the pure protection market. So that's that's being staffed largely by our competition specialists working with Chris's team, but also the lawyers and so on. So as with any topic that we work on, we have a core team in the insurance sector, and then that can be supplemented and that will grow or reduce things like authorisations, depends on the number of firms coming in through the door.
Enforcement will depend on the amount of activity that we've got going on and whether we take enforcement cases. So I'm sure you're aware we've got around six enforcement cases currently live related to insurance and the consumer duty. So there's a fair chunk of people there. But Chris, would you like to talk to your your department in terms of.
10:14
Lord Sharkey
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Lord Sharkey
Sure. Thank you. So in my team, which is insurance and appointed representatives, we have 130 people. And within the insurance section was around 100. We don't wall off a team specifically for home and travel, but the retail general insurance market as a whole is the largest focus of our of our team. And for since these are very important markets within that, quite a good chunk of our effort is focused on, on these markets that you're looking at.
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10:15
10:15
Speaker 1
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Speaker 1
May maybe worth me adding our approach to, in our approach to supervision. We take two different two. There were two different aspects to it. Firstly, we have a firm specific supervision. So for the very largest firms or what we call the significant market participants, we will have a dedicated team who will work specifically on those firms. So regardless of what lines of insurance those products or those firms are doing, we will always have somebody doing something with those firms.
For the smaller firms, we take more of a risk based approach. We use data to, to to act as trigger points. And we have what we call flexible supervision teams who will go where we think the issues are. So that's our firm supervision. And then we have issue supervision, which will then be where we take a particular topic. So where we're doing work on things like claims handling, we will have a number of people who will do a multi firm piece of work.
So they will focus on that topic for a set period of time to do that work. So so that's why it's sometimes difficult to say how many people are working on one thing at one particular line, because they may be doing many things within an individual firm.
For the smaller firms, we take more of a risk based approach. We use data to, to to act as trigger points. And we have what we call flexible supervision teams who will go where we think the issues are. So that's our firm supervision. And then we have issue supervision, which will then be where we take a particular topic. So where we're doing work on things like claims handling, we will have a number of people who will do a multi firm piece of work.
So they will focus on that topic for a set period of time to do that work. So so that's why it's sometimes difficult to say how many people are working on one thing at one particular line, because they may be doing many things within an individual firm.
10:16
Baroness Noakes
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Baroness Noakes
Okay. If we take home and travel insurance, which has been the subject of a super complaint and something which is widely agreed to produce consumer outcomes, which are not ideal, how is it that you don't have people working dedicated to working on that? In what, how, how can you be an effective regulator of those areas which have clearly been clearly identified if you haven't got dedicated resource?
10:17
Speaker 1
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Speaker 1
So I think we've we've explained it badly so clearly where we have taken on pieces of work as topics in response to the super complaint. But also I would note we were doing many of those things before the super complaint. We will have people dedicated to working on those so Chris can add to those numbers. We can we can certainly write to you if it's helpful to have something more specific. So off the top of my head, I can't remember how many people are working at the moment on the competition study.
But our Pure Protection competition study, for example, has dedicated people working on that in the competition team, as well as economists, lawyers and others. I don't think we're interested in
But our Pure Protection competition study, for example, has dedicated people working on that in the competition team, as well as economists, lawyers and others. I don't think we're interested in
10:17
10:17
Lord Sharkey
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Lord Sharkey
About that? I mean, we have currently eight work streams of activity following on from the which super complaint and our original work in home and travel insurance in 2025, covering claims and servicing areas, covering the sales process and picking up on specific points that which raised on contract terms as well. So across my team, there's a large effort and focus on bringing those pieces of work to a conclusion.
10:18
10:18
Speaker 1
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Speaker 1
I think that's a that's a very difficult question to answer. We're certainly not claiming it's job done. As you can see from the fact that we've taken a number of steps in terms of the work that we are doing. We have done a number of things. So if I take, for example, travel insurance, and I look at the issue of people struggling to get insurance where they have medical claims or medical specific medical conditions, we've taken some steps already working with firms requiring them to refer people to a directory where they cannot provide insurance themselves, and we believe that's contributed to around 21000 more policies being sold.
There is still further work to be done in that area and that we're doing so. I think we know what the issues are. We've set out what our priorities will be, but we're not all the way there yet. So I think it's hard to give a mark.
There is still further work to be done in that area and that we're doing so. I think we know what the issues are. We've set out what our priorities will be, but we're not all the way there yet. So I think it's hard to give a mark.
10:19
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10:19
Baroness Donaghy
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Baroness Donaghy
like to just go back to the point about the numbers in terms of, you know, who's doing it and who's. specialising on it, you replied, or at least Chris has replied in terms of it, people who are doing it as a result of the super complaint. But what what would be the steady state? I mean, what happens to all those people who are going to get quite a lot of expertise dealing with the super complaint? Are they going to then disappear and go off and be dealing with, you know, the next super complaint or something else? What's the steady state?
10:19
Speaker 1
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Speaker 1
No. So we prioritise our work according to where we see the harms, and we go through an annual budgeting and prioritization process to do that. So at various points in time, we may have more people in banking than in insurance or in insurance than consumer finance. It depends on on where we are and where we prioritise our work. At the time, the insurance team, as Chris says, is around 100 people that that will I would expect that to be something similar to that.
As a core insurance team, many of the people who are working on those specific issues are specialists in insurance and would stay in that area. So we're absolutely on the same page in terms of retaining any specialism and any specialist knowledge that we get through particular pieces of work. What you will see is in areas where actually we we pick up more perhaps project based work. So I mentioned the competition team. Those people will do the work on a particular market study as competition specialists, working with the specialists in Chris's team.
If we're talking about insurance, the banking specialists, we're talking about banking. And then if there are policy projects to be carried out off the back of that as the remedies that would be carried out again in the sector, so the knowledge is retained. So that's something I'm very confident of. That's something that we do on a regular basis. But let's say it will ebb and flow in terms of what are the priorities on we can't we can't do everything in every sector all the time.
As a core insurance team, many of the people who are working on those specific issues are specialists in insurance and would stay in that area. So we're absolutely on the same page in terms of retaining any specialism and any specialist knowledge that we get through particular pieces of work. What you will see is in areas where actually we we pick up more perhaps project based work. So I mentioned the competition team. Those people will do the work on a particular market study as competition specialists, working with the specialists in Chris's team.
If we're talking about insurance, the banking specialists, we're talking about banking. And then if there are policy projects to be carried out off the back of that as the remedies that would be carried out again in the sector, so the knowledge is retained. So that's something I'm very confident of. That's something that we do on a regular basis. But let's say it will ebb and flow in terms of what are the priorities on we can't we can't do everything in every sector all the time.
10:21
10:21
Lord Sharkey
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Lord Sharkey
Yes. Good morning. Some witnesses have told us that after three years in force, the consumer duty has yet to drive any kind of meaningful change or measurable change in the consumer home and travel insurance market. How would you respond to that critique? And in particular, do you think that the consumer duty will achieve better outcomes without detailed specifications? For example, minimum standards?
10:21
Speaker 1
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Speaker 1
So I think the consumer duty is an incredibly important tool. It's something that we use on a regular basis, and I think we can point to a number of areas where we have seen positive outcomes as a result of the duty being in force. For example, if we look at the gap insurance market, we took action under the consumer duty looking at fair value. We've seen savings generated around £70 million a year for consumers.
So we do use it in those areas. In travel insurance, I mentioned the work we've done around requiring firms to point people to a directory of specialist insurers where they cannot get cover through. Perhaps that's the first place they've tried, and we believe that's helped contribute to around 21000 more policies being sold. As a result of that, there are right across the piece. I think we are seeing positive outcomes in terms of the consumer duty.
And we've also we've also got further work to do. That's why we've got a number of enforcement cases in place. So we have. Six focused on insurance, looking at things like claims handling information to consumers and so on. But it's, it's proving that that's got that's got teeth. There is a role for prescription. There will always be a role for detailed rules where perhaps they're needed for something very specific. But the consumer duty gives more flexibility for firms and more flexibility for us to achieve the right outcomes.
And as I say, that's what we're interested in, I think standardisation can be important in some areas. So for example, ensuring people get the right information in the right way. So if we talk about something like premium financing, having an Apr, for example, I think that's something that if it's calculated differently, people can't compare. I think if we go too far with standardising insurance terms, firstly, that's not something that we as a regulator can push. It would be something for Parliament to do.
But secondly, what your risk is actually hollowing out of policies to get to a particular point that then leaves some people without, without not being served, or a whole series of add ons that start to come and it gets more confusing. So. As I say, I think the key thing is that people are able to understand the policies that they're buying, that they achieve fair value and something that meets their needs.
So we do use it in those areas. In travel insurance, I mentioned the work we've done around requiring firms to point people to a directory of specialist insurers where they cannot get cover through. Perhaps that's the first place they've tried, and we believe that's helped contribute to around 21000 more policies being sold. As a result of that, there are right across the piece. I think we are seeing positive outcomes in terms of the consumer duty.
And we've also we've also got further work to do. That's why we've got a number of enforcement cases in place. So we have. Six focused on insurance, looking at things like claims handling information to consumers and so on. But it's, it's proving that that's got that's got teeth. There is a role for prescription. There will always be a role for detailed rules where perhaps they're needed for something very specific. But the consumer duty gives more flexibility for firms and more flexibility for us to achieve the right outcomes.
And as I say, that's what we're interested in, I think standardisation can be important in some areas. So for example, ensuring people get the right information in the right way. So if we talk about something like premium financing, having an Apr, for example, I think that's something that if it's calculated differently, people can't compare. I think if we go too far with standardising insurance terms, firstly, that's not something that we as a regulator can push. It would be something for Parliament to do.
But secondly, what your risk is actually hollowing out of policies to get to a particular point that then leaves some people without, without not being served, or a whole series of add ons that start to come and it gets more confusing. So. As I say, I think the key thing is that people are able to understand the policies that they're buying, that they achieve fair value and something that meets their needs.
10:24
Lord Sharkey
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Lord Sharkey
Mr. Knight, I think if I could add, I think that we are doing some work which will be helpful, particularly in the areas, for example, like storm claims, where a standard approach or a standard wording wear and tear or wear and tear, for example, would be helpful potentially to, to improve customers understanding. So we're working with the, with the Abi and others on that and probably other areas where standard wording doesn't always guarantee a standard interpretation, of course, but, but it would be helpful.
And we see that also in some other markets where they have slightly more. Do you think all this is working fast enough for consumers? I mean, it sounds as though there's a lot of effort and time goes into deliberations about what may be done or may be corrected. But in terms of speed of delivery, I think, I think where we see harm occurring, we are we are acting quickly to, to, to stop that at source, if you like, and prevent that from that harm.
Some of these other issues in areas we're talking about, are there not trivial to, to, to resolve? And different people have reasonable, different, different views? I think we're seeing in some respects, for example, trust in insurance, that UK customer service index is trust and insurance up 2% over the last two years, and trust and insurance now higher than trust in, in business as a whole, which is obviously a welcome thing to see other areas where we're not yet seeing, you know, movement, I'd say complaints to voice, for example, where I know you have phones coming later, but you'd like to see those coming down over time.
So I think, as David says, we're we're very much of the view that there's lots more to be do. And obviously, as the the world changes and industry changes in practice, changes will also need to be constantly on guard to make sure we keep ahead of events.
And we see that also in some other markets where they have slightly more. Do you think all this is working fast enough for consumers? I mean, it sounds as though there's a lot of effort and time goes into deliberations about what may be done or may be corrected. But in terms of speed of delivery, I think, I think where we see harm occurring, we are we are acting quickly to, to, to stop that at source, if you like, and prevent that from that harm.
Some of these other issues in areas we're talking about, are there not trivial to, to, to resolve? And different people have reasonable, different, different views? I think we're seeing in some respects, for example, trust in insurance, that UK customer service index is trust and insurance up 2% over the last two years, and trust and insurance now higher than trust in, in business as a whole, which is obviously a welcome thing to see other areas where we're not yet seeing, you know, movement, I'd say complaints to voice, for example, where I know you have phones coming later, but you'd like to see those coming down over time.
So I think, as David says, we're we're very much of the view that there's lots more to be do. And obviously, as the the world changes and industry changes in practice, changes will also need to be constantly on guard to make sure we keep ahead of events.
10:26
Speaker 1
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Speaker 1
If I may, I think the other thing that that perhaps isn't as visible is the work that we do within supervision. So enforcement outcomes are tend to be public. They take they do take time to investigate properly. And there's a lot of work that goes into that. Hence, hence they're not immediate in terms of the outcome that you see. Having said that, what we do is a lot of work on supervisory front with firms, some of which is persuasion, where we can actually raise an issue with the firm and they will sort it voluntarily and sort it quickly.
So, for example, we have engaged with 241 communications directly to firms. We've had 41 section 165, which are data requests that we we compel firms to provide us with specific bits of data so that we get it in the right way to identify problems. We've introduced 26 voluntary requirements, which is where firms we asked them to sign a some form of restriction or forces them to do an activity or stop an activity, for example. And we have a number of section 166, which are the skilled persons report, where we actually require somebody independent to go in and either look at an issue or carry out an activity.
If we're not satisfied, they've resulted in a number of areas of customer redress. So we have 11 instances of customer redress, and there are a number of other actions that happen. These are just not as public in terms of what we see, because what we're seeking to do is achieve the right outcome at pace. And that's not always an enforcement investigation.
So, for example, we have engaged with 241 communications directly to firms. We've had 41 section 165, which are data requests that we we compel firms to provide us with specific bits of data so that we get it in the right way to identify problems. We've introduced 26 voluntary requirements, which is where firms we asked them to sign a some form of restriction or forces them to do an activity or stop an activity, for example. And we have a number of section 166, which are the skilled persons report, where we actually require somebody independent to go in and either look at an issue or carry out an activity.
If we're not satisfied, they've resulted in a number of areas of customer redress. So we have 11 instances of customer redress, and there are a number of other actions that happen. These are just not as public in terms of what we see, because what we're seeking to do is achieve the right outcome at pace. And that's not always an enforcement investigation.
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10:28
Lord Sharkey
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Lord Sharkey
Question. Yeah, sure. Thank you. It is. I agree with you. Very important issue. And consumer understanding is at the heart of one of the aims of the consumer duty. I think a a lack of understanding sort of shows itself up in a number of ways through through insurance, lots of complaints, claims that are rejected under insurance and so forth. And when firms see these things happening, consumer duty is requiring those firms to ask themselves why that's happening.
And particularly, is that an understanding problem fundamentally, a customer's acting in that way because they don't understand. And then to ask themselves, what can we do differently to to increase that level of understanding? We're doing a range of work on that topic, including we have been working with around a dozen companies to understand what they do, how they act, to improve understanding, and we're hoping to bring that into a sort of good and bad practice report.
As an example, we're doing a lot of work with consumer groups and the Abi, as I've mentioned earlier on, on how understanding could be improved in, in, in, in, in, across the, across the board and particularly in storm claims and other things. So it's a really key area of focus and a real outcome that we are looking to drive through our activity.
And particularly, is that an understanding problem fundamentally, a customer's acting in that way because they don't understand. And then to ask themselves, what can we do differently to to increase that level of understanding? We're doing a range of work on that topic, including we have been working with around a dozen companies to understand what they do, how they act, to improve understanding, and we're hoping to bring that into a sort of good and bad practice report.
As an example, we're doing a lot of work with consumer groups and the Abi, as I've mentioned earlier on, on how understanding could be improved in, in, in, in, in, across the, across the board and particularly in storm claims and other things. So it's a really key area of focus and a real outcome that we are looking to drive through our activity.
10:29
Lord Hollick
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Lord Hollick
And I, my own journey through this process, I found AI to be very helpful in identifying questions I should ask and issues should I consider. To what extent does AI sit within the perimeter of the work of the FCA? I think the Mills review suggested that there was a case for bringing it within that the curtilage of the of the review. Where where does that stand?
10:30
Speaker 1
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Speaker 1
It depends in terms of the use of AI and what we're talking about. So firms at the moment we see using AI themselves for mainly back office applications. And that's something that we would consider as part of their systems and controls to make sure they have the right controls in the right areas in place where they use that. We look at the tools we have under the senior managers regime for accountability, making sure somebody is accountable for how they use it and the outcomes that are achieved.
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10:30
Speaker 1
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Speaker 1
No, I appreciate that. I was I was trying to sort of give you the general, but we also have the consumer duty. We do not regulate the AI companies . As things stand. Again, that's not within our perimeter. I would agree with you. They can be a useful tool and they can be helpful in terms of asking people, helping people with the questions to ask. I think people should certainly take a step back and think about if they're using it as providing some form of recommendation, what's best for me and so on.
That's, that's when I think it starts to get blurry in terms of. They shouldn't be giving specific advice, but at the moment these AI companies are outside of our perimeter walks.
That's, that's when I think it starts to get blurry in terms of. They shouldn't be giving specific advice, but at the moment these AI companies are outside of our perimeter walks.
10:31
Lord Vaux of Harrowden
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Lord Vaux of Harrowden
So just to follow up on that a little bit, you do regulate the price comparison websites. You can see AI effectively taking over what the price comparison websites do. You go to ChatGPT and ask it to policies and you follow through on the back of that. What's the difference between those two things?
10:31
Speaker 1
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Speaker 1
Essentially at the moment by way of business? So the, the price comparison websites, you can transact through those in terms of actually they earn something from what you're doing with that at the moment, you can't execute through the, the AI platforms. Now, as we get into things like agentic AI, that may well become possible. So I think there is a question of how does that develop going forward. But as it stands, they are not within our regulatory perimeter.
So I think it's something we need to monitor very closely. I think it's something. But whether to bring those within the perimeter will be a matter for Parliament rather than regulators. We will say we will stay close to it in terms of how regulated firms are using it. But I think there are risks and there are benefits to that. There's
So I think it's something we need to monitor very closely. I think it's something. But whether to bring those within the perimeter will be a matter for Parliament rather than regulators. We will say we will stay close to it in terms of how regulated firms are using it. But I think there are risks and there are benefits to that. There's
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Speaker 1
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Speaker 1
I agree, I agree, and I think the important thing is that consumers understand what they're doing and they understand the limitations of AI. But again, we can only put requirements on regulated firms. We can't put requirements on AI firms who are, as I say, not necessarily doing it by way of business. Sorry. When I say by way of business, I mean by way of regulated business.
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Speaker 1
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Speaker 1
Well, so we do look at regulated firms use of AI. What we cannot do is we don't set our own perimeter in terms of saying, what do we regulate and what do we not. Again, that is a matter for Parliament, not not us. And I think the Mills review suggested that this is a question for the Treasury advice.
10:34
10:34
Lord Davies of Brixton
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Lord Davies of Brixton
Just pursue this point because you say it's outside. AI firms are outside your regulatory perimeter, but the regulatory perimeter is set by what people do, not whether they happen to apply to you to to become regulated. And if AI firms are doing something which legislation requires to be regulated, surely you should. You should be regulating them. The mind boggles about the practical implications, but they're outside the regulatory perimeter because you fail to include them.
10:35
Speaker 1
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Speaker 1
So I agree with the first part of your statement. I disagree with the second. So the first part of the statement, if they are doing activity that under legislation is required to be regulated, then yes, they should be within that perimeter. They would be required to be authorised and we would regulate them accordingly. As it stands, the activities that we see being carried out are not within the scope of that legislation.
Therefore, they do not they are not required to be authorised by us for the activities they are doing currently.
Therefore, they do not they are not required to be authorised by us for the activities they are doing currently.
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10:35
Speaker 1
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Speaker 1
Because it depends on what they're actually doing. As I say at the moment, they are not doing that by way of business in terms of actually earning, for example, from the company people invest with, they're also not generally providing specific recommendations of, you should invest in this particular one. Here they are answering questions and giving factual information that people are asking questions to. I'm not I'm not disagreeing with you that it could develop in that way.
And I think that's something that as a society, we've got to monitor very closely. But as things stand, as the legislation is drafted, they are not required to be authorised by the Financial Conduct Authority.
And I think that's something that as a society, we've got to monitor very closely. But as things stand, as the legislation is drafted, they are not required to be authorised by the Financial Conduct Authority.
10:36
Baroness Noakes
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Baroness Noakes
Lady Donaghy, Lady Lady Pole and Lord Hill. And then we're going to move on, irrespective of whether it's in or out of scope of the legislation. Do you think that the FCA ought to provide guidance to potential users of AI? Because it seems to me that if they are unregulated and people might just sort of pop in information about their own personal circumstances in order to elicit details about advice on what insurance policy they might take, they might end up by revealing a lot of information about themselves, which would then be misused.
Do you do you not think that there should be some guidance about a. These are not necessarily regulated. B they're not necessarily reliable. C there might be dangers of giving away private information about yourself. It seems to me that people are diving into this, and there is no one organisation available to protect them from themselves, if you like.
Do you do you not think that there should be some guidance about a. These are not necessarily regulated. B they're not necessarily reliable. C there might be dangers of giving away private information about yourself. It seems to me that people are diving into this, and there is no one organisation available to protect them from themselves, if you like.
10:37
Speaker 1
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Speaker 1
Yeah. So I the use of AI goes far beyond the reach of financial services. So it is not just a financial services problem. I do agree with you that I think that people need help with where and when to use AI. What are the limitations and the risks of using AI. And I think that needs to form an important part of the financial inclusion strategy in terms of actually giving people that right information.
I do think there is a part for us to play in terms of where people engage with financial services. So we've given warnings, for example, when people engaging with influencers, when we look at payments, we've given warnings about actually what you see on social media and thinking about that and what may or may not be a scam. So this is very much in our thinking. And it's part again, some of the things that came up in the Mills review.
So we're considering what we could do in that space. But we are part of the answer, not the answer in the information for consumers.
I do think there is a part for us to play in terms of where people engage with financial services. So we've given warnings, for example, when people engaging with influencers, when we look at payments, we've given warnings about actually what you see on social media and thinking about that and what may or may not be a scam. So this is very much in our thinking. And it's part again, some of the things that came up in the Mills review.
So we're considering what we could do in that space. But we are part of the answer, not the answer in the information for consumers.
10:38
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10:38
Lord Hill of Oareford
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Lord Hill of Oareford
Just on AI. You rightly said that, you know, you can only operate within the terms of reference. You're given by legislation, given the speed with which this is moving, and clearly the potential for developments in AI, making the consumer duty that you busily apply largely redundant in terms of its effect on citizens. Does the Treasury have have have they been asking you what your views are on this issue?
10:39
Speaker 1
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Speaker 1
So I haven't personally spoken to the Treasury about that. And through the Mills review that we commissioned from Sheldon Mills, who was one of our executive directors previously, he obviously spoke to the Treasury amongst others. So certainly those discussions have happened, but I haven't been party to those specifically myself.
10:39
10:39
Baroness Donaghy
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Baroness Donaghy
Right. I'll move on to I wanted to ask you about the Your Priority Regulatory Priorities report, where it says that you're going to simplify insurance rules in favour of relying on the consumer duty. And I'm wondering what's what's driven that and how is that going to improve things. And in particular, where are you going to get the information from because you had difficulty getting outcomes data in in other instances.
So where's where's the consumer duty going? Information going to come from early enough to make interventions? Or is it just that you wait for harm and, and, and then act? I yeah, especially if you haven't got so many rules that, that have fixed points for what has to happen.
So where's where's the consumer duty going? Information going to come from early enough to make interventions? Or is it just that you wait for harm and, and, and then act? I yeah, especially if you haven't got so many rules that, that have fixed points for what has to happen.
10:40
Speaker 1
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Speaker 1
So I'll talk generally in general, then Chris can come in on some of the work we're doing. So having worked in with both prescriptive rules and with more flexibility in terms of the consumer duty, I'm personally a big advocate for the duty, giving us more flexibility to focus on outcomes rather than prescriptive rules that potentially constrain innovation, constrain some of the the flexibility that firms have to do things in the right way. So if we take an example of disclosure, we could sit here as a regulator and say, we think you should disclose this in that particular way.
But actually different groups of consumers have different needs. And what we really want is firms to think about the products they're selling to the consumers. They're selling them to the needs of those people, and they can do that more readily with flexibility. In terms of the data. This is something that when we introduced the duty, we were very clear with firms about we expected them to have proper MI packs with the very largest firms.
We actually did quite a lot of work with them, looking at some of their MI packs to make sure that they were collecting the right sort of information. So to give you an example, if somebody introduces a new product, we would expect them to do work to and collect data to show whether that product was reaching the right target market, it was behaving as intended, what complaints experience was and how they were dealing with those, so that you can spot problems early on.
And I think.
But actually different groups of consumers have different needs. And what we really want is firms to think about the products they're selling to the consumers. They're selling them to the needs of those people, and they can do that more readily with flexibility. In terms of the data. This is something that when we introduced the duty, we were very clear with firms about we expected them to have proper MI packs with the very largest firms.
We actually did quite a lot of work with them, looking at some of their MI packs to make sure that they were collecting the right sort of information. So to give you an example, if somebody introduces a new product, we would expect them to do work to and collect data to show whether that product was reaching the right target market, it was behaving as intended, what complaints experience was and how they were dealing with those, so that you can spot problems early on.
And I think.
10:41
10:42
Speaker 1
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Speaker 1
So we we collect data from firms. So if for example. Well we take a number of feeds. But. So we scan social media. We use the stats from the Ombudsman. We look at firms own data that we collect. So if, for example, we were seeing an uptick in complaints, that would be something as a trigger that we could consider whether we need to go and look more deeply. So there are those sort of things that we can look at.
We carry out specific work. So where we've done work on things like fair value. So if we talk about premium financing, we went and had a look at what firms were charging, and we challenged them to show that there was a reasonable relationship between cost and price. And we took action off the back of that. And some of that action is still ongoing. So the consumer duty, I think with that focus on outcomes and with the data to support that those outcomes are being delivered, gives us more flexibility to act, and I think to act more quickly than specific rules.
That's not to say there isn't a role for specific rules, say so where necessary, but I think it's a balance. But Chris, did you want to talk about some of those?
We carry out specific work. So where we've done work on things like fair value. So if we talk about premium financing, we went and had a look at what firms were charging, and we challenged them to show that there was a reasonable relationship between cost and price. And we took action off the back of that. And some of that action is still ongoing. So the consumer duty, I think with that focus on outcomes and with the data to support that those outcomes are being delivered, gives us more flexibility to act, and I think to act more quickly than specific rules.
That's not to say there isn't a role for specific rules, say so where necessary, but I think it's a balance. But Chris, did you want to talk about some of those?
10:43
Lord Sharkey
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Lord Sharkey
Thank you, because I've been to a couple of months ago, I was on the receiving end of regulation, obviously, and I actually think it's quite helpful for firms at the moment. We have the consumer consumer duty, but we also have some rules around prod for which around products, general insurance pricing practices and the Icap's rules, which sort of governance, if you like, interactions between insurers and customers. And I think as the consumer duty settles down and beds in, if you like, then it might be more helpful, maybe less need to have all those prescription rules.
But at the moment for firms, they want the generally trying to do the right thing and they like the reassurance. Or at least I did as I'm not speaking for everybody, but like the reassurance of those rules that, you know, you're on the right track. So, for example, we've guided that if firms are complying with prod four, then we believe they're generally complying with the product part of the consumer duty so that that is important. Data is obviously a key, key thing.
And one important piece of work we're doing at the moment is, is looking at the value measures that we brought out five years ago and doing a post-implementation review of those to see. We believe they've been helpful to a number of commentators and customers and, and market players, but where we where we go next with those measures.
But at the moment for firms, they want the generally trying to do the right thing and they like the reassurance. Or at least I did as I'm not speaking for everybody, but like the reassurance of those rules that, you know, you're on the right track. So, for example, we've guided that if firms are complying with prod four, then we believe they're generally complying with the product part of the consumer duty so that that is important. Data is obviously a key, key thing.
And one important piece of work we're doing at the moment is, is looking at the value measures that we brought out five years ago and doing a post-implementation review of those to see. We believe they've been helpful to a number of commentators and customers and, and market players, but where we where we go next with those measures.
10:44
Baroness Donaghy
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Baroness Donaghy
I thought the problem was you were having difficulty getting the information for the value measures as part of the, of, of the, of the question. So it's all a work in progress. And you've got sources of information and you hope to pick it up. But does that mean ultimately rules will cease to exist or just never be updated?
10:44
Lord Sharkey
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Lord Sharkey
I don't have a crystal ball in terms of how that I mean, I think the work on value measures is really important. And you've heard it from other witnesses on on that we are completing our work to , to do the post inflation review of that and engaging a lot with industry players, consumer groups on what they believe would be useful, where, where they believe they would be useful to take those those rules.
10:45
Speaker 1
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Speaker 1
I think rules will continue to exist. The consumer duty sits alongside that, I think. But there is a, I think, benefit in removing some areas of prescription where it is not helpful or potentially it drives the wrong outcome. So I talk about disclosure as an example, a rigid framework of disclosure doesn't necessarily lead to information that reaches consumers in the right way, based on the fact consumers are not a homogenous group. Different people need to have different needs across potentially different products.
Different firms deal with different target markets. And I think having that flexibility to design that based on what those consumers need is actually really important. What's important on the back of that is to monitor those outcomes, to make sure that that's effective and that it is driving the right outcomes. So there will always be, for example, rules that say, if you've got something like a credit agreement, you need to have some standardisation around an API, for example.
But I think more flexibility elsewhere could actually drive better outcomes. So it's a balance.
Different firms deal with different target markets. And I think having that flexibility to design that based on what those consumers need is actually really important. What's important on the back of that is to monitor those outcomes, to make sure that that's effective and that it is driving the right outcomes. So there will always be, for example, rules that say, if you've got something like a credit agreement, you need to have some standardisation around an API, for example.
But I think more flexibility elsewhere could actually drive better outcomes. So it's a balance.
10:46
Lord Turnbull
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Lord Turnbull
Turnbull it seems to me we have a long and fragmented chain of command at the top. We have the companies, the boards plc's, the brand name, they have a management. Then there are underwriters. And then you come down to the people who are the sort of key players in this, the claims management companies, many of whom are subcontractors now in issues like the consumer duty, is it like the sort of reign of my garden? It gets through to the top centimetre, but it is not getting down to the claims management.
Do you have direct contact with them and direct interaction? There's a particularly ugly word came up called declination. In other words, the rate at which you decline a claims which is varies highly between certain product groups. Are you getting down to talk to the claims assessors to make sure that they are following the consumer duties as much as the people at the top of the company?
Do you have direct contact with them and direct interaction? There's a particularly ugly word came up called declination. In other words, the rate at which you decline a claims which is varies highly between certain product groups. Are you getting down to talk to the claims assessors to make sure that they are following the consumer duties as much as the people at the top of the company?
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Speaker 1
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Speaker 1
No I understood I'll ask Chris to talk about some of the work we're doing on claims handling in a second. But generally speaking, what we would do is set requirements for firms, and it is for firms to make sure they are delivering and measuring those those outcomes. It's we can't man mark every individual firm and every individual aspect within every individual firm. The firms and their boards have to take responsibility. We expect them to monitor those outcomes and make sure that if, for example, they are seeing poor claims experience, they are dealing with it.
We track that through the data that we receive, and we may use that as a trigger for further work. Claims handling is one of the areas that both we and the witch super complaint, identified as an area where things were not happening consistently, as we would expect in some cases within firms themselves, in some cases where they outsource claims handling. And that's why we're doing a further piece of work, which is where we deploy a team of people to go and operate across a number of firms to investigate what's happening in those areas.
So, Chris, did you want to talk a little bit about that? And when we're coming. Out, I
We track that through the data that we receive, and we may use that as a trigger for further work. Claims handling is one of the areas that both we and the witch super complaint, identified as an area where things were not happening consistently, as we would expect in some cases within firms themselves, in some cases where they outsource claims handling. And that's why we're doing a further piece of work, which is where we deploy a team of people to go and operate across a number of firms to investigate what's happening in those areas.
So, Chris, did you want to talk a little bit about that? And when we're coming. Out, I
10:49
Lord Sharkey
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Lord Sharkey
think you covered most of it. I think we're very clear that a company might delegate this activity, but ultimately that company remains responsible for it and its outcomes. And so we've been looking at how claims are handled. And we're also looking at arrangements between companies and their outsourcers to understand, for example, remuneration works or other incentives that might that might be might be in play. And we will be later this year going out to 300 firms in the sector to understand much better what is being outsourced and to whom.
And so we can build a much better picture of of that. But the responsibility for delivering outcomes remains with the company. Whether it's outsourced in detail may may be actually a very, you know, positive thing from a customer's perspective. But the responsibility stays with the company. You
And so we can build a much better picture of of that. But the responsibility for delivering outcomes remains with the company. Whether it's outsourced in detail may may be actually a very, you know, positive thing from a customer's perspective. But the responsibility stays with the company. You
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10:50
Lord Sharkey
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Lord Sharkey
I think we're very keen to maintain the clarity that the responsibility sticks with the company, and I wouldn't want sort of companies to think, well, the FCA is regulating claims handlers now and therefore we don't have to worry about it. So I think we're really clear that the principle must stand that that it's the company's responsibility.
10:50
Speaker 1
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Speaker 1
So this is where things like the senior managers certification regime comes in. So somebody is accountable for the claims handling within a firm. If that's not happening, then that individual can be we can take action against individuals if needed. What we would generally do is we will follow up on the work that we are that Chris has mentioned, where we see actions that are needed within firms. We will we will take those actions.
And that could range from identifying problems to the firm and seeking assurances from them that they will deal with it right through to enforcement with any number of steps that we can take in between. So I agree with you that there is a there is an issue around claims handling that is something that we've identified. It's an area where there seems to be a higher number of complaints and a higher number of referrals to the Financial Ombudsman in terms of dissatisfaction than in other areas of insurance.
And that's why we're doing this specific piece of work to follow up. But we are very clear that the accountability is with the firm, and we can take action against the firm, and we can make an individuals have to be accountable within the firm.
And that could range from identifying problems to the firm and seeking assurances from them that they will deal with it right through to enforcement with any number of steps that we can take in between. So I agree with you that there is a there is an issue around claims handling that is something that we've identified. It's an area where there seems to be a higher number of complaints and a higher number of referrals to the Financial Ombudsman in terms of dissatisfaction than in other areas of insurance.
And that's why we're doing this specific piece of work to follow up. But we are very clear that the accountability is with the firm, and we can take action against the firm, and we can make an individuals have to be accountable within the firm.
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Speaker 1
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Speaker 1
Not necessarily. I think we are. We are. We take feeds. I mean, we're very interested in the outcomes of this inquiry. We've looked at the evidence that's been produced so far, and we will feed that into the work that we do at the moment. We've identified the areas we set out in our market report as the priorities, and that's what we are focusing on now. If something comes along that we think is a higher priority, then we can of course consider pivoting.
But it's also important to finish the work that we've started. And that includes things like claims handling, which is underway.
But it's also important to finish the work that we've started. And that includes things like claims handling, which is underway.
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10:52
Lord Griffiths of Fforestfach
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Lord Griffiths of Fforestfach
Yes. I was interested in your characterization of the teams associated with larger insurance companies and then smaller ones. It's the risk based assessment. If we take those teams, which are associated closely with companies, one of the striking things about the characteristics of the insurance market we're looking at is that the rate of declination, of refusal of claims seems to be fairly consistent year after year within home and travel. And given that, do your teams consider that the rate of decline, declining claims, is part of the business plan of the companies which they are.
They are supervising.
They are supervising.
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Lord Sharkey
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Lord Sharkey
Yeah. Maybe I can perhaps talk to how perhaps it should be being done and then what we what would we expect to see? I think when you're looking to design an insurance product, then you would start with looking at the claims that you want to pay or the events you want to cover, and you would want to define those in a way which is clear and not subject to moral hazard, for example, and get your statistical data evidence to back up what the frequency and severity of those claims would be.
And that's your base base cost from that perspective, any, any claim that's made that's not falling within that definition, if you like, is sort of a waste and there's sort of a natural alignment of interest to ensure that there should be a natural alignment of interest to ensure that customers do understand, because a claim that falls under the definition of claims that you're trying to, that you want to pay is, is, is, is, is an error from a company's perspective. And, and I think so what we would look to see is actual fundamental desire to understand why customers are mis claiming and bringing, bringing that down over, over time.
So it's sort of perhaps the other way around is what we were expecting, expecting to see.
And that's your base base cost from that perspective, any, any claim that's made that's not falling within that definition, if you like, is sort of a waste and there's sort of a natural alignment of interest to ensure that there should be a natural alignment of interest to ensure that customers do understand, because a claim that falls under the definition of claims that you're trying to, that you want to pay is, is, is, is, is an error from a company's perspective. And, and I think so what we would look to see is actual fundamental desire to understand why customers are mis claiming and bringing, bringing that down over, over time.
So it's sort of perhaps the other way around is what we were expecting, expecting to see.
10:55
Speaker 1
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Speaker 1
So could I, could I add, I think so firstly we do monitor claims acceptance rates. So we see in home it's about I think about two thirds of claims are accepted in areas like motor. It's actually it's actually higher. That's something that's an indicator to us, which again is why we're looking at claims handling. So we take that across the industry. We also look at it as individual firms, and we've identified it as a area to look at across the industry as a whole.
Hence the firms that Chris said we're looking at. If we look at gap insurance, one of the things that we that drove us to take action there under fair value was the fact that we saw only around 6% of premiums actually being reflected in claims. So it was something that we found firms were struggling to show there was a reasonable relationship between cost and, and, and price, and therefore the product was not delivering what it was necessarily being sold for.
Hence, we required firms to to stop. I just.
Hence the firms that Chris said we're looking at. If we look at gap insurance, one of the things that we that drove us to take action there under fair value was the fact that we saw only around 6% of premiums actually being reflected in claims. So it was something that we found firms were struggling to show there was a reasonable relationship between cost and, and, and price, and therefore the product was not delivering what it was necessarily being sold for.
Hence, we required firms to to stop. I just.
10:56
Lord Griffiths of Fforestfach
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Lord Griffiths of Fforestfach
Go back to the point you've made, which is very striking in the numbers, which is the difference between motor insurance and home travel. To what do you attribute that difference? Is it associated with the fact that motor insurance is much more highly regulated from the DVLA and the the whole legal structure around what you need to be able to put a car on the road, or is it something else? How do you explain this extreme difference?
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Lord Sharkey
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Lord Sharkey
I think I think home and travel insurance do have some inherently more complex features compared to car insurance, which does drive some of the distance differences and maintains them over time. So within home insurance, for example, storm claims is a particular area where we know that the ratio of claims accepted is 31%. So it's a it's a lot lower. So that's a very clear area where there's there's not understanding.
And that's we are why we are working with the Abi and others to see whether there are more clarity we can bring. They can bring to all parts of the journey to the sales process, post the sales process and throughout the claims process to support that understanding. So it's not like there's no hope to recover those, but I think they are inherently more, more, more complex. But that's why getting into the detail some more , to really uncover where there are gaps will have a return.
And that's we are why we are working with the Abi and others to see whether there are more clarity we can bring. They can bring to all parts of the journey to the sales process, post the sales process and throughout the claims process to support that understanding. So it's not like there's no hope to recover those, but I think they are inherently more, more, more complex. But that's why getting into the detail some more , to really uncover where there are gaps will have a return.
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Speaker 1
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Speaker 1
Well, we measure success by looking at whether we think firms are providing fair value and can demonstrate that. We look at the differences in the different types of insurance across and what the rates of declination are. I would say home insurance is not one bucket you can include within that. Things like homeserve claims, buildings, claims, contents, claims, and there may be differences. Why
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Speaker 1
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Speaker 1
I think we start putting a target in. Then I think we get to a point where actually what happens is you may find hollowing out of policies. You may find a whole range of things that could potentially happen, but we're not at the stage of having done the work and seen exactly what the issues are yet. That's the work we are doing, and we'll consider what potential remedies come out of that at the end. But I think we need to understand the issues first.
Thank you.
Thank you.
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10:59
Lord Lilley
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Lord Lilley
Chair. We've heard repeatedly both from the price comparison websites themselves and from users of them, that they would welcome information about outcomes, about the because dealt with clarifying the terms of coverage, the price comparison websites clear about the price, but nobody ex-ante knows what it's going to be like if they actually have to make a claim. What's the likelihood of declination? What's the likelihood of just being bored to death and prolonging the whole process? Have you been trying to we thought we've heard that there have been calls for you to sort of insist on the provision of outcome measures.
Have you been trying to obtain the provision of outcome measures, and which would be comparable, and enable consumers to make informed choices, and if so, what's been the problem in getting it?
Have you been trying to obtain the provision of outcome measures, and which would be comparable, and enable consumers to make informed choices, and if so, what's been the problem in getting it?
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Speaker 1
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Speaker 1
So, as Chris said, we are doing a review into the value measures that we put in place previously. Now, at the time we introduced those, we were very conscious of the difficulty of what do you show that is meaningful for consumers? And actually, when you look at the the differences between products of Differences between products of how do you actually bring that together in such a way that makes sense. So if there's a particular add on, for example, in one product but not another, and a claim is accepted or declined on that, but it's not a feature of this product.
How do you meaningfully make. A
How do you meaningfully make. A
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Speaker 1
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Speaker 1
That said, we do hear those calls. We do agree with the price comparison websites and others that there is more useful information that can be provided. I think what set out is, is helpful now in terms of, of price, in terms of actually, I think there's they do reasonably well in terms of some of the features of the insurance. But I agree in terms of actually, is this going to do what I want it to do at the end of the day is something that is more difficult to assess.
So that's something we're reviewing now. That's something we are looking at, what more information can be provided and can we make it more consumer facing in a way that is .
So that's something we're reviewing now. That's something we are looking at, what more information can be provided and can we make it more consumer facing in a way that is .
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Speaker 1
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Speaker 1
I don't have the outcomes in terms of product. specification in terms of both actually in terms. So so if the value measures of is this going to do what I want it to do? At the end of the day, that's the thing that I think most people are interested in. That's what we're looking into. What could we do as a consumer facing measure to help with that? So we'll look at that. I don't have the answers yet.
I think it is complex. We are working with industry and . Consumer
I think it is complex. We are working with industry and . Consumer
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Lord Hollick
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Lord Hollick
next year. That's what we're working towards. I think obviously there's nothing stopping firms that are already publishing this information. If they if they have it or sharing it, or the price comparison websites asking, asking for it, there's no prohibition on, on, on doing that. Yeah, we, I suppose the price comparison websites could ask questions on a standardised form, but the sort of presumption is there's got to be either some. standardisation alternative to.
standardisation that will make it meaningful. I think confidence that there'll be . Comparable
standardisation that will make it meaningful. I think confidence that there'll be . Comparable
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Lord Vaux of Harrowden
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Lord Vaux of Harrowden
stick by the rules. Yeah. Reports just on this just philosophically, I don't really understand how the consumer duty can work for. comparison price, website price comparison websites in the sense that at the end of the day, insurance is a promise to pay up if something goes wrong and the the consumer duty must be. ultimately aimed at ensuring that the right policy is taken out by the right person. It meets their needs.
The price comparison websites have no idea whether the policy is going to meet the needs of the.
The price comparison websites have no idea whether the policy is going to meet the needs of the.
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Speaker 1
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Speaker 1
wrong. I mean, nothing else really matters in insurance policy. Well, I think I think that's one part of it. But it's also a question of if we think about. If you go to a price comparison website looking for a particular policy, then you may have needs that I don't have. You need to understand whether or to buy effectively. You need to understand whether actually you're paying for things you don't need, or whether you're actually getting the features through the product that the ones you want.
And if that's your primary interface to go in and compare .
And if that's your primary interface to go in and compare .
11:04
Lord Vaux of Harrowden
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Lord Vaux of Harrowden
Product offerings, then I think there is a very important role for the consumer duty in terms of I'm not I'm not saying there isn't an important role for them. And I think there have been incredibly successful at bringing price down and making the market more competitive and all the rest of it. I agree. My question is, how ultimately can the can the consumer can the the price comparison website be sure if it doesn't have the claims data that it is.
providing a service that actually is meeting the . Consumer
providing a service that actually is meeting the . Consumer
11:04
Speaker 1
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Speaker 1
need? That's the bit that I really struggle with here conceptually. Well, there are value measures that exist at the moment, but they're not consumer facing. So firms can firms can see them, industry commentators can see them. But that's what we're looking to refine and improve. The price comparison websites can also talk to the insurers. There's there's it's not something that they can't discuss with these firms when they're listing them on their websites and so on. So there is an element of if they're presenting information to customers, they have to do a certain element of due diligence of what they put on their site.
In terms of, is there a reliable measure of value at present for on price comparison websites? No, but I think that's what they're interested in putting on, and that's something we've said we'll work with them to, to achieve anything that they put on there. I would expect under the consumer duty to that, for that to be accurate, to be to be fair reflection, to be something that's presented in a way that consumers can read and understand. So it may apply slightly differently to how it applies to perhaps the insurer.
In terms of, is there a reliable measure of value at present for on price comparison websites? No, but I think that's what they're interested in putting on, and that's something we've said we'll work with them to, to achieve anything that they put on there. I would expect under the consumer duty to that, for that to be accurate, to be to be fair reflection, to be something that's presented in a way that consumers can read and understand. So it may apply slightly differently to how it applies to perhaps the insurer.
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Speaker 1
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Speaker 1
role for the FCA in standardising the underlying data data? I think in terms of what's. provided to to us, yes. That's something we look at in terms of trying to make that as efficient as possible in terms of what's presented to consumers. Again, it depends. I think this is if we're looking at value measures, I think we will have to potentially get into some standardisation.
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Speaker 1
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Speaker 1
people measure each company measures it in a different way, it won't be a meaningful comparison. And that's where I say there's a balance between prescription and outcome. Having said that, it doesn't necessarily need to be us that does that. So if the industry can come to an agreement on one way of doing it that doesn't need . Rules, then that may be
11:06
Lord Griffiths of Fforestfach
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Lord Griffiths of Fforestfach
that. Griffiths. Coming back to this issue of consumer duty, to what extent do you think at present there's a. difference in the response you're getting from the large. companies where there's a lot of. discretion and as few. rules as I can, as far as I can understand as possible, as opposed to smaller.
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Speaker 1
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Speaker 1
Size as such. That said, with something like the consumer duty, we do have expect something of of proportionality. So we would not expect, for example, the same level of data from a small firm as we would necessarily expect from a large firm if their product line is much simpler in terms of we wouldn't necessarily expect the same. We would expect something different in terms of what they present, in terms of what they monitor, because it's simpler to do that.
So it does flex and the consumer duty allows them to do that. We do also have objectives around competition and powers around competition. So you use the example of banking in in areas like open banking, which will of course move into open finance, which will be relevant to, to insurance. We've been very clear that with, with things like the infrastructure that's set up that can't be set up for an elite club of, of the largest banks, it needs to give access to smaller banks and also payment firms and fintechs who may have bright ideas and are run well and can engage.
So I think the duty enables us to flex and to be proportionate. It is.
So it does flex and the consumer duty allows them to do that. We do also have objectives around competition and powers around competition. So you use the example of banking in in areas like open banking, which will of course move into open finance, which will be relevant to, to insurance. We've been very clear that with, with things like the infrastructure that's set up that can't be set up for an elite club of, of the largest banks, it needs to give access to smaller banks and also payment firms and fintechs who may have bright ideas and are run well and can engage.
So I think the duty enables us to flex and to be proportionate. It is.
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Speaker 1
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Speaker 1
You're right, larger firms have more resources to throw at things, including the. consultations that we put out, and to engage with that, and we're very mindful of that and seek to engage in different ways in terms of the things that we do to help them, and to explain that we've run a series of webinars, for example, where it's available to all firms, to actually small firms can come and join in and hear from us directly to try and actually ease some of that transition of understanding.
So.
So.
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Speaker 1
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Speaker 1
How did the two mesh together? So the growth and competitive. So we're very focused on the role of, well the. competitiveness of the UK. So we seek to do anything that we look to do. We would seek to be proportionate. We work with other jurisdictions. We look at the requirements in other jurisdictions, and what we want to do is ensure that through any actions we take, UK companies are competitive, but equally we need to focus on the UK market and make sure that we are delivering what's right for the UK.
A classic example of that, not in insurance, but if we look at how we've developed a regime for for.
A classic example of that, not in insurance, but if we look at how we've developed a regime for for.
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Speaker 1
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Speaker 1
For example, crypto for example, we've been very mindful of what's going on in the US, what's going on in the UK. We've designed what we feel is right for the UK. Well, keeping it very much in mind. The UK's competitiveness position insurance I think is based on trust. We see a significant number of people who are either not taking insurance, particularly around travel insurance. I think when you would feel that they really should be for their own.
protection in going abroad, if we can, through our work, encourage more people to understand and take the cover they need, then that's good for growth as well. So it's a general feature of our work. And I think actually, again, I think the principles based approach to things like the consumer duty allows us to be more flexible, which in turn . Gives
protection in going abroad, if we can, through our work, encourage more people to understand and take the cover they need, then that's good for growth as well. So it's a general feature of our work. And I think actually, again, I think the principles based approach to things like the consumer duty allows us to be more flexible, which in turn . Gives
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Lord Hollick
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Lord Hollick
specifically in home and travel insurance areas? So, Chris, did you want to. Yeah, look, I think. We have a number of areas taking direct action that had a very specific, specific positive impact on customers. So for example, in the premium finance areas issue that arose through our data that we that we gather on insurance pricing practices. And that's something that we have identified, highlighted, and worked with, with companies who believe as a result of that, we've managed to save customers.
£157 million estimated on an annual basis. So those are some specific when we have a specific intervention on a specific issue, you can see a specific. metric move. I think we talked about understanding and trust. I think trust is a difficult one to find a single measure to, to use. But clearly trust is a hugely. important quality to have in the insurance market. And we're seeing, for example, in a fair of finance data shows that trust in the insurance sector has gone up for the last two years.
And it also shows.
£157 million estimated on an annual basis. So those are some specific when we have a specific intervention on a specific issue, you can see a specific. metric move. I think we talked about understanding and trust. I think trust is a difficult one to find a single measure to, to use. But clearly trust is a hugely. important quality to have in the insurance market. And we're seeing, for example, in a fair of finance data shows that trust in the insurance sector has gone up for the last two years.
And it also shows.
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Lord Hollick
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Lord Hollick
That people who have made a claim have more trust in their companies than people that haven't made a made a claim, and I referred earlier to the customer service index, where we've seen insurance increase and go above the average. So those are the sort of the , the wider. metrics that we would look to, to see whether things are, are working. Clearly, there's lots of things that are changing in the world in which we're environment, but it would be a mixture of, you know, spotting, preventing and addressing harm where we can show a direct impact like that and.
wider efforts . To
wider efforts . To
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Speaker 1
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Speaker 1
improve the level of trust in the industry. I mean, I'm about to add, I think. So we expect firms to collect data based on the customers that they're dealing with, the products that they sell. So where products firms introduce a product, we expect to have a target market. We expect them to monitor who is buying those products. So is it reaching the right people that they intended? We expect them to track things like product performance in terms of do people keep those products? If it's a longer term product, we expect them to track complaints.
We would look at ombudsman referrals. We would look at ombudsman uphold rates. We would look to carry out bespoke studies into things like consumer understanding. And we may ask firms for their own studies. And indeed we look at independent results. So so we expect firms to have quite a wide range of data. And that it's not just product specific. It could be . Things
We would look at ombudsman referrals. We would look at ombudsman uphold rates. We would look to carry out bespoke studies into things like consumer understanding. And we may ask firms for their own studies. And indeed we look at independent results. So so we expect firms to have quite a wide range of data. And that it's not just product specific. It could be . Things
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Speaker 1
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Speaker 1
That that was more the thrust of my question. Okay. So so I think for us, then it comes back to a number of those things that I've just mentioned. So if we are seeing high levels of. complaints in a sector, that's an indicator that something is or is not is or is not working. We would expect to see complaints come down over time. That is an indicator that the duty is being effective.
If we are seeing a high number of ombudsman referrals, that suggests a level of dissatisfaction in terms of the way that firms are are handling those complaints. That, again, is an indicator that things may or may not be working. So again, a positive outcome would be we would see those coming down over time. Chris has mentioned trust in the sector. We can we can it may be difficult to get specific, but you can still monitor trends and you can look at what people's.
If we are seeing a high number of ombudsman referrals, that suggests a level of dissatisfaction in terms of the way that firms are are handling those complaints. That, again, is an indicator that things may or may not be working. So again, a positive outcome would be we would see those coming down over time. Chris has mentioned trust in the sector. We can we can it may be difficult to get specific, but you can still monitor trends and you can look at what people's.
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Speaker 1
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Speaker 1
What's the satisfaction level of customers when they do make a claim, for example. And so these are all the sort of things that can tell us whether the consumer duty is working, as well as things like sentiment surveys and so on, that we that we can come up with As and service quality metrics. So . We
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Speaker 1
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Speaker 1
Countries think about regulating these markets? Yeah, I'm not aware of any specific data on the performance. We can take that away. I mean the regulatory frameworks, as you know, are very different across the different jurisdictions. I mean, we look very closely at sort of what rules are in place in Europe. We look at other jurisdictions like the US and Australia. I mean, US, for example, is difficult to look at because it's not necessarily one pattern of regulation.
It can be done state by state. So we do see pockets where if we take the US, for example, there are some areas where they have standardization around fire policies, but it's not a national thing. It's across different areas. So so it is it is it's difficult to answer that .
It can be done state by state. So we do see pockets where if we take the US, for example, there are some areas where they have standardization around fire policies, but it's not a national thing. It's across different areas. So so it is it is it's difficult to answer that .
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Speaker 1
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Speaker 1
I think the talk about we touched again on sort of levels of decline. I mean, in many ways that can be quite difficult to predict. If we look at the sort of what's happened even this year in terms of sort of conflict in the Middle East, in terms of, you know, firms will always make a certain amount of assessment of what's going to happen weather wise. But climate is changing. There have been some reasonably unprecedented events. It can be very difficult, and I think that will flow through into the insurance market.
If we look at last year in the home market, I think there was a 1% rise in. premiums on average. Then we look at the things that are happening this year in terms of, say, the conflict in the Middle East. We think about the disruption to jet fuel and so on. And so how some of that is going to flow through. So it can be very difficult to predict. And but it's I'd say in terms of things like fraud, I think that is potentially firms will have a an assessment of the amount of fraud that they expect.
We certainly all want fraud to come down. And I do think there's more that can be done around data sharing in terms of fraud across financial services. I also look at payments and banking as an area that . We
If we look at last year in the home market, I think there was a 1% rise in. premiums on average. Then we look at the things that are happening this year in terms of, say, the conflict in the Middle East. We think about the disruption to jet fuel and so on. And so how some of that is going to flow through. So it can be very difficult to predict. And but it's I'd say in terms of things like fraud, I think that is potentially firms will have a an assessment of the amount of fraud that they expect.
We certainly all want fraud to come down. And I do think there's more that can be done around data sharing in terms of fraud across financial services. I also look at payments and banking as an area that . We
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Lord Hollick
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Lord Hollick
definitely think more can be done in that space. But Chris, anything to the first part of your question? I think we see that from our Financial Lives survey. 68% of people that buy home insurance in 62% of people who buy travel insurance focus primarily on price. On the other hand, only. 31% of people believe they have enough information to really compare between providers. So I think that as we've been talking about. understanding and trust, there's a there's a definite in there to, to, to, whether it's through price comparison websites and other ways to, to improve that 31% figure to, to a higher number to, to.
perhaps . Generate
perhaps . Generate
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Lord Hollick
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Lord Hollick
. The industry seems very bashful about that. We work with the Insurance Fraud Bureau and we get data from their from their department. So, for example, the data we got from them were highlighted to us the issue of ghost broking in the motor insurance market, for example. And we saw a big increase in fraudulent, potentially fraudulent activity, social media activity. And we were able then to, to, to act to, to highlight that as an issue and to drive on social media directly ourselves to address that issue.
So yes, we do get data and we do look to it to, to, to build into the mix, if you like all the other data that we have to direct our.
So yes, we do get data and we do look to it to, to, to build into the mix, if you like all the other data that we have to direct our.
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Speaker 1
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Speaker 1
definitions of what these things mean. Yeah. So we I do think this is a challenge in terms of different firms meaning different things when they look at it. I think as Chris mentioned, actually, some of the work we are doing now working with the industry is to see if that is achievable. So we're actively looking at it at the present moment in time. Now, I don't think we'll ever go to the extent of saying, right, this is what a standard policy document looks like with all of these terms.
And I don't I don't think we should, but whether there are some common. definitions so that people can get a good understanding of what is, for example, wear and tear and . Storm claims in terms of what
And I don't I don't think we should, but whether there are some common. definitions so that people can get a good understanding of what is, for example, wear and tear and . Storm claims in terms of what
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Speaker 1
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Speaker 1
what would you what what would the FCA do about that? Well, firstly, I think we're with a coalition of the willing between consumer groups and the industry, but it's always going to be a challenge getting everybody to agree. That will be an option for us to consider as to whether it is something that we need to, to introduce in that potentially would be a specific rule, something we would need to consider the merits of based on those discussions.
So if it's proved to be incredibly difficult to do that in a way that is meaningful, then we'd have to take that into account. If we think they just can't agree, then that's something else. So we'll we'll see where the work gets to. But I wouldn't rule out the fact . That we
So if it's proved to be incredibly difficult to do that in a way that is meaningful, then we'd have to take that into account. If we think they just can't agree, then that's something else. So we'll we'll see where the work gets to. But I wouldn't rule out the fact . That we
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Baroness Noakes
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Baroness Noakes
Welcome to this session, which is the final oral evidence session as part of the committee's inquiry into the regulation of consumer insurance market. And I thank Mr. Johnston and Miss Lamb for attending this session. The session is open to the public. It's broadcast live and is subsequently accessible via the parliamentary website. A verbatim transcript will be taken of the evidence and will be put on the parliamentary website.
So could I ask you, Mr. Johnston Johnson and . Miss
So could I ask you, Mr. Johnston Johnson and . Miss
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Baroness Noakes
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Baroness Noakes
ombudsman, managing director at Financial Ombudsman Service. Thank you both very much. So can we start with some background on the work of the force in consumer insurance and specifically in home and travel insurance, which is the the focus of our inquiry? Can you outline the scale of the force's work in consumer insurance issues compared with other financial services? And then .
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Lord Eatwell
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Lord Eatwell
Within that, how much relates to home and travel insurance? Thank you very much, chair, and thank you to the committee for inviting us to give evidence today. The Financial Ombudsman Service is the free and independent dispute resolution service that investigates complaints that the firms haven't been able to resolve themselves. We typically see just over. 200,000 complaints escalated to our level of the redress scheme each year, and within that, about.
45,000 relate to insurance products, and within that.
45,000 relate to insurance products, and within that.
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Lord Eatwell
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Lord Eatwell
year relate to home and travel insurance of various types. We will look at what the firm has done against the regulatory rules and the relevant laws to consider what is fair and reasonable in all the. circumstances of the. complaint to resolve that dispute. I'll turn to Rachel to set out a little bit more in . Terms of the
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Speaker 3
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Speaker 3
The majority of the complaints that we will see is around the claims. So the claims experience, which may actually not be a surprise because it's when something has gone wrong for a. consumer or they think something has gone wrong, that they will raise a complaint with the insurer. And if that's not put right in most circumstances, that is put right. They will raise their complaint with us, and that is around the claim.
That can be a range of issues around the claim. So declined claim, delayed claim. So sort of handling of the claim or the.
That can be a range of issues around the claim. So declined claim, delayed claim. So sort of handling of the claim or the.
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Lord Eatwell
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Lord Eatwell
What we see is, is shifts over time. So particularly in travel insurance, so recently with the travel disruption in the Middle East, we will see an influx related to declined claims coming through there. Or if there's been a season of particularly bad storms, we might see a periodic increase in terms of claims related to that. The kinds of issues that we see coming through are, however familiar across both. It'll be the decision to decline the claim.
It'll be around. exclusions and communication about the exclusions or the limitations to the policy terms. We will sometimes see claim delay, particularly if the firms have been responding to large volumes of claims on their. policies that can sometimes cause backlogs in firms, and that will then feed its way through the system to us, as well as the general.
It'll be around. exclusions and communication about the exclusions or the limitations to the policy terms. We will sometimes see claim delay, particularly if the firms have been responding to large volumes of claims on their. policies that can sometimes cause backlogs in firms, and that will then feed its way through the system to us, as well as the general.
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Lord Eatwell
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Lord Eatwell
Also explain how it is that the falls actually works with the FCA. Certainly, yes. So in terms of the consumer duty itself, it is something that we would consider in complaints that come through to us. It's probably too early to see any definitive longitudinal trend coming through in in terms of consumer duty, in terms of how we work with Financial Conduct Authority. As they reference this morning, we do give a data feed of of cases that are coming through to the service, and that will include information about the firm against which the complaint is made, the issue that has arisen.
anything specific in terms of what we found through our.
anything specific in terms of what we found through our.
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Lord Eatwell
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Lord Eatwell
Plus the outcome, if we've awarded redress or made a. recommendation to the firm. So they will get that that sort of data feed from our systems. In addition to to that, we are structured. directorate by directorate based on product. So we have a directorate that focuses on our insurance work, and the leadership team in that directorate will also meet regularly with their. counterparts at the Financial Conduct Authority, as well as consumer groups and industry, to share lessons learned coming out of the cases, any trends or patterns that are coming through, or any firms that are giving rise to .
Concern in
Concern in
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Lord Eatwell
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Lord Eatwell
duty has brought any measurable change. Do you think it has at the moment, we feel it's still too soon in terms of seeing any observed trends, given the the the complaints that we see have got to be raised first. They've then got to work through the firm system. They've then got to come through to us and be investigated through our processes. So while the consumer duty is relatively new, we're still seeing that behaviour feed through the system.
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Lord Eatwell
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Lord Eatwell
And likewise places certain obligations on the FCA around the redress scheme and making sure that the service is appropriately funded and resourced to do its work. Within that, we are impartial. Looking at the individual cases, the MOU. formalizes some of our working. relationship with the FCA and I think is to the assistance of consumers, because what it provides is that where we. identify that there is an issue coming through that might potentially have wider implications.
So it might impact many consumers. We can formally refer that through to the FCA for their. consideration as to whether they might want to make a regulatory intervention. They might want to set up a consumer redress scheme. So that provides a quicker, more. formalized route of escalating concerns that we . See
So it might impact many consumers. We can formally refer that through to the FCA for their. consideration as to whether they might want to make a regulatory intervention. They might want to set up a consumer redress scheme. So that provides a quicker, more. formalized route of escalating concerns that we . See
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Speaker 3
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Speaker 3
I think to start with is the point that kind of you know what? We on average receive about. 45,000 complaints across the. insurance sector, which is a small. proportion of the complaints the firms will deal with, which is a small. proportion of the claims that are handled and the. policies that are out there. So we can only comment on the. 45,000 complaints, and it would only be right that we would comment on those.
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Speaker 3
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Speaker 3
Within that, we see we see general trends. So generally we see complaints around when something has gone wrong or someone thinks something has gone wrong, which is around the claim, which may not be a surprise , because that's when the value of the product really comes to the fore. And it really matters for the consumer. So we tend to see the complaints much more around around the claims issues and claim decline issues and claim delay issues.
We share that.
We share that.
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Speaker 3
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Speaker 3
As James has described with with the FCA, but also with the Abi and with firms. So we regularly have an engagement where we share that insight. Sometimes when it's around a range of. complaints that may be connected, similar consumers having similar issues, or we may see similar detriment across a range of complaints. Sometimes that's around a small range of complaints that we will share with the FCA. And it might be they connect that with their.
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Speaker 3
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Speaker 3
When a consumer has lost their vehicle and they're needing to replace their vehicle, a value that is offered hasn't been enabled them to replace their vehicle. That's the essence of the complaint. And we were we were seeing issues around that that we raised with the FCA, and they've taken activity a taken action around that. We've also we also raised that with the Abi and the firms. So there's been quite a lot that has been addressed around that.
And actually, we have seen those uphold rates and the volume . Of those
And actually, we have seen those uphold rates and the volume . Of those
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Lord Eatwell
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Lord Eatwell
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Lord Eatwell
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Lord Eatwell
You know, as part of the advertising material. It showed skiers skiing off piste. But actually that was one of the exclusions in the policy. So that was immediate feedback with that firm, because that was giving rise to complaints that were coming through about that firm. So we will see this specific related to what we see from the firm on each case that we determine, but we also try and aggregate up learning. And then we share that with the sector through a number of different routes.
So we publish case studies on our website. We also send out a. publication periodically called Ombuds News that shares broader trends and patterns. We share statistical summaries which are generic in nature kinds of issues, giving rise to complaints by sector firms which are giving rise to complaints. And we publish that twice yearly on our website as as well. And where we identify sort of bigger trends and issues, we then flag those to the FCA and to firms and share both of that insight where we think that there's maybe some joint work that needs to be done.
So, for example, around. communication and understanding by consumers. So we work at those different levels. We similarly work with consumer groups. So we share that kind of insight with consumer groups, particularly those consumer groups who have advice functions where it's often quite helpful for them to. understand what the. service is thinking about a particular issue so that they can advise . Anybody who
So we publish case studies on our website. We also send out a. publication periodically called Ombuds News that shares broader trends and patterns. We share statistical summaries which are generic in nature kinds of issues, giving rise to complaints by sector firms which are giving rise to complaints. And we publish that twice yearly on our website as as well. And where we identify sort of bigger trends and issues, we then flag those to the FCA and to firms and share both of that insight where we think that there's maybe some joint work that needs to be done.
So, for example, around. communication and understanding by consumers. So we work at those different levels. We similarly work with consumer groups. So we share that kind of insight with consumer groups, particularly those consumer groups who have advice functions where it's often quite helpful for them to. understand what the. service is thinking about a particular issue so that they can advise . Anybody who
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Lord Eatwell
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Lord Eatwell
Because there are sort of already very, quite prescriptive rules around the insurance sector. The service, even under it's fair and reasonable remit, has to consider the relevant law, then the relevant. rules and work through that, that list. So a lot of that doesn't change. And we continue to apply the regulatory rules case by case. As I say, it's still too early to draw firm conclusions about the impact of consumer duty. We've not seen that come through our casework yet.
But many of the issues that we continue to see, we will flag back with the firms and the.
But many of the issues that we continue to see, we will flag back with the firms and the.
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Lord Eatwell
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Lord Eatwell
It might be with particular firms or products over a particular period of time. So from the statistical data, it might just look like it's. communication and it's continuing to be an issue. But within that, the numbers might show that we've addressed a particular problem with a particular firm at a point in time that has got better, even if it may have got worse in another firm over here. So that's why it's still too early to draw any firm conclusions around consumer duty from our.
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Lord Turnbull
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Lord Turnbull
products out there. Turnbull I mean, several references to the uphold rate sounds a very simple concept. Someone applies, makes a claim, it's refused, and you say, no, no, it should have been paid out. But actually there are all sorts of variants on that. It could be you make a claim you were offered for.
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Lord Eatwell
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Lord Eatwell
of those do you actually end up paying out the full thing? Yeah. So our , our uphold rate is based on whether there's been a change in outcome. So we don't we don't have a sort of concept of partially upheld or, you know, the extent to which it's upheld. So the way our, our systems gather information at the moment, if we've achieved a change in outcome, then that will count as an uphold in terms of travel insurance for declined claims.
It's about 1 in 3 cases that we that we change the outcome for the consumer. And in terms of home insurance, it's around.
It's about 1 in 3 cases that we that we change the outcome for the consumer. And in terms of home insurance, it's around.
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Lord Turnbull
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Lord Turnbull
1 in 4 cases that we change the outcome. Do you think there is any sense in which the claims companies are thinking we'll get a bit tougher, a decline more claims they'll go to the Ombudsman and let them sort it out. There'll be some reprieves, but we still end up net better. Is there anything you think that's . Is
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Lord Eatwell
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Lord Eatwell
degree of cynicism in the way people are behaving? It's difficult to see that from from our position in terms of the numbers that we're seeing, some of the numbers have been fairly stable. We would be alert to that kind of thing if we felt that a particular firm was suddenly generating a higher uphold rate. That's exactly the kind of information that we would be sharing with the.
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Lord Eatwell
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Lord Eatwell
Left it to you to add something on? I wouldn't know enough about how how that works because we don't see the acceptance rate. We only see the complaints that have been escalated through to us. So quite often those are people who've had their case declined. We very rarely see cases . Where the claim has been
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Lord Eatwell
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Lord Eatwell
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Speaker 3
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Speaker 3
And looking much more qualitative data. We do see some of those issues where we might see. complaints where where yes, it's declined claim they've avoided the policy because they've. identified that that information might not have been shared, and therefore they may not have offered that insurance policy. Those become very case.
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Speaker 3
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Speaker 3
as unfair is just too bad. So where we might not uphold a complaint and sometimes, you know, well, the majority of the time we're not upholding a complaint. And sometimes that can be really a really tough kind of, you know, outcome for a consumer. Our role is also to explain that, to explain this, the why that that is the answer what has happened in the. circumstances and. even even, you know, even in those.
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Lord Lilley
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Lord Lilley
Lily, someone I know who's making a claim and is actually looks. If the claim is going to be accepted in the very satisfied, rather complimentary about the way it's been handled by the insurance company. nonetheless told by cynical neighbours. But the insurance company will get it back, you know. subsequently your your premium will go up. Does that happen? And if so, is it the sort of thing that you deem to be .
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Lord Eatwell
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Lord Eatwell
something that somebody could complain to the service about. It's not coming through in significant numbers from from what we see, but we can go and double check to see if that's coming through. We would always look at what the complaint is specifically about. We do get complaints about pricing coming through in terms of, you know, the disclosure or the information that's used or people being unhappy with the price and . Value that
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Lord Eatwell
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Lord Eatwell
have just under about. 2500 colleagues working in our casework teams, which are teams that accept the cases at the front door, make sure we've got all of the evidence ready to carry out an investigation. And as you say, is this a complaint that fits what the service does? You know, a fair, fair and informal alternative to the courts process. So that team will set up the case, and it will then be allocated in a stream to one of the product specific directorates, whether that's general banking, fraud and scams, pensions, investments and.
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Lord Eatwell
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Lord Eatwell
You know, they may have lost their home and they're living in a caravan or, you know, so we would obviously want to try and get those complaints dealt with as quickly as possible. And we would look at what the complaint is about. It would then be. allocated to the next available. investigator who's got the skill sets to carry out those investigations. And as a senior leadership team, we are always looking at where the queues are within the.
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Lord Eatwell
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Lord Eatwell
And as we bring more colleagues in, we can retrain colleagues and move them across to help with particular work. pressures as they come through to try and maintain the overall provision of the service. Obviously, if something happens bigger scale over a longer period of time, then we'd be going back through our . Plan and
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Speaker 3
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Speaker 3
something has gone wrong, people may have put their claim in. Then it hasn't been resolved in the way they expected it or it's been declined. They've raised the. complaint and then they, they kind of, you know, and then they come to us. That's quite a lengthy journey for, for consumers. And, and something has has gone wrong. They've raised a claim. It might be it's not gone wrong in the way they expected it to, but it hasn't been put right in the way that they were expecting it to.
We by nature see that that creates a inherent vulnerability, a vulnerability that most consumers may step into. They may not be in their home, they may have lost their vehicle, etc., or not have access to within that. So we are very conscious of that. And to James's point, very conscious of making sure that timeliness matters too in how we're progressing. So in maintaining that balance between the quality of the work we're doing and the timeliness and how we're able to progress those answers for, for consumers.
But within that, there will be.
We by nature see that that creates a inherent vulnerability, a vulnerability that most consumers may step into. They may not be in their home, they may have lost their vehicle, etc., or not have access to within that. So we are very conscious of that. And to James's point, very conscious of making sure that timeliness matters too in how we're progressing. So in maintaining that balance between the quality of the work we're doing and the timeliness and how we're able to progress those answers for, for consumers.
But within that, there will be.
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Speaker 3
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Speaker 3
Someone's not in their home or there may be a cash settlement and they're really. struggling to be able to put things right and handle the, the kind of, you know, funds they've been given to, to address the, the detriment or put put things back in the way they should be. And so we can see quite extreme elements of vulnerability. I must note, though, those are very small in a. proportion of the insurance complaints.
And we're very small part of a whole system. But, but they can be quite extreme examples. And actually we, I, you know, we have done quite a lot of work in sharing those particular.
And we're very small part of a whole system. But, but they can be quite extreme examples. And actually we, I, you know, we have done quite a lot of work in sharing those particular.
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Lord Vaux of Harrowden
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Lord Vaux of Harrowden
Books. One of the themes that emerged as we've gone through this process is that one of the reasons for claims being declined is the fact that the consumer didn't really understand what it was. They had bought things like wear and tear with storm damage and various other things. How do you think the. industry could improve consumer.
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Speaker 1
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Speaker 1
The exclusions, as you rightly say, is the sort of wear and tear provisions or we sometimes see after a storm. Lots of consumers might think that their garden fence is covered, so their garden fence is blown down. They will assume it's covered as part of their as part of their buildings insurance. It's often not. And so just those common things that that the average consumer might think is part of the policy, just being really clear whether they're excluded, what the policy limitations are, and also really focus on the.
disclosure elements, particularly in travel. Make sure that accurate questions are being asked, focused on the issues that are going to impact the extent of cover or the price of cover. Recognising that this is, Rachel highlighted price sensitive at purchase, value. sensitive . At point
disclosure elements, particularly in travel. Make sure that accurate questions are being asked, focused on the issues that are going to impact the extent of cover or the price of cover. Recognising that this is, Rachel highlighted price sensitive at purchase, value. sensitive . At point
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Baroness Donaghy
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Baroness Donaghy
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Speaker 1
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Speaker 1
I think the awareness of your organisation. I think there's always more that we can do. We're trying to do a lot more around advertising. We've recently been doing some more sort of. explanations about what the service does through social media to try and encourage that. Where somebody has got a dispute and the firm hasn't resolved it, they know they can come to us. We're easy to use, we're.
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Speaker 1
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Speaker 1
We're free to use. Sometimes consumers think that we might charge them a fee, but we don't. So we're free to use. We're impartial. There's always more that we can do in this space. And obviously, when firms deal with a complaint, they're under an obligation to signpost to our. service at the end of that complaints journey as well. And we also work with a lot of consumer advice groups to make sure that their, in their advice lines can also help .
People
People
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Speaker 1
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Speaker 1
See no change or no change of outcome. So in terms of the service that we that we feed through, I think it's you you could make that argument. I'd also say it's important where there are any insights, any trends or patterns that come through, even though it's a small number, it may identify problems either within a particular firm like like that travel. insurance brochure or broader systemic issues over over time, which it's helpful to have an impartial, independent body to be able .
To
To
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Baroness Noakes
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Baroness Noakes
cast the mirror back on the industry. Yes. Portsmouth. No further questions. I just have one last question. When when you examine a complaint, do you do you pay any regard to the distribution channel through which the product was purchased? And therefore, can you shed any insights on whether complaints have any relationship to how the product is bought, for example, whether it's bought through directly by the insurance with the .
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Speaker 1
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Speaker 1
Insurance company via a price comparison website or through a broker? At the moment, we can't because the data we gather is focused around the investigative process. But that is something in terms of the lessons learned piece, as we're doing more around sharing lessons learned with some of the reforms to the service coming through, that is something we are . Looking at
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