FCA warns insurance companies over renewals as RAC apologises to customers

Financial Conduct Authority (FCA) rules, introduced in April 2017, state customers should be prominently told the amount they paid over the previous year and should also be encouraged to shop around for better deals.

However, in the RAC’s case, it failed to do either when it sent out renewal letters, something the FCA described as “unacceptable”.

Indeed, the FCA has found that insurance firms more widely are still failing to properly implement the rules despite warning in October about failings.

Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA, said: “It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules. Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.

“We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent. As we said in October, we expect other firms to take notice of these issues, to look at what they are doing and to make sure they are getting it right.”

The FCA outlined in October 2017 how firms were failing to meet the rules, highlighting four particular areas where it found firms were failing. These were:

• failing to implement the new rules for all products and customers;
• misstating the previous years’ premium;
• leaving out the shopping around message or not presenting it in a way which draws the reader’s attention; and
• firms failing to properly identify all customers who needed renewal information either because of system error or a mistaken interpretation of the type of customer that is captured by our rules.

The FCA said it “expects firms and senior management in those firms to take immediate action to ensure they are compliant”.

RAC said in a statement: “While our breakdown policy renewal documentation did accurately contain all the necessary information, we recognise that some of the key information in our letters was not as prominently displayed as it should have been.

“We continue to be committed to giving members clear and fair information so they can make the right decision and are contacting those affected to ensure they are satisfied.”