The FCA has published its findings from their thematic review which looked into whether general insurance intermediaries and insurers provide timely and appropriate information to their customers, when arranging or providing premium finance.
This is an important aspect for most brokers and hence it is important that you understand the FCA’s concerns.
Although the review was primarily focussed on the on-line home and motor insurance market, the principles and requirements are the same for face-to-face advice and should form part of your firm’s sales process.
The FCA’s primary concern was that some firms were not meeting the provision of information requirements to their customers and those customers may not be achieving fair outcomes when choosing to pay by instalments when buying insurance.
Below is a brief summary of the FCA findings:
Firms did not always provide clear and appropriate information on:
- Payment options and the different costs associated with these;
- The interest rate, any fees or charges, a representative annual percentage rate (APR) and the total amount payable;
- The instalment option being offered;
- The role being performed by the firm when arranging premium finance;
- The fact the firm was acting as a credit broker;
- The name of the credit provider or details of their relationship with the firm;
- Whether a fee would be charged.
As a result customers:
- May not realise the additional costs of paying by instalments;
- Struggle to compare pricing;
- Enter into premium finance arrangements without understanding the key features, terms and risks of the agreement.
The FCA expects all firms to consider the findings of the review, to take action to address the shortcomings and ensure they are complying with their regulatory requirements.
The Thematic Review Paper TR15/5: Provision of premium finance to retail general insurance customers can be found here.