Nearly two-thirds of insurance IDDs uncompliant
The work with medium-sized and small insurance brokers found 261 (62 per cent) of IDDs reviewed did not comply fully with FSA requirements. Common errors included omitting the FSA ‘Key Facts’ logo, making minor changes to the prescribed wording or including descriptions of services or information that the FSA does not require firms to provide, and providing inaccurate or no details about access to the Financial Services Compensation Scheme or the Financial Ombudsman Service.
This follows findings released by the FSA in August which found that 55 per cent of mortgage firms investigated had not issued compliant disclosure documents to clients.
Clive Briault, FSA managing director of retail markets, warned: “The survey indicates that some firms are having difficulty in understanding our disclosure requirements. We will feed back the findings to the broker sector to help firms reach the required standards.
“We will continue to monitor quality and, if it is found that some firms continue in these failings, appropriate action will be taken, including enforcement if necessary.”
The FSA also reviewed the content and format of more than 100 policy summaries and Key Facts documents for household, critical illness, income protection, motor and other types of general insurance.
Problems included poor quality of style and presentation, making it difficult for customers to read and understand the documents, plus significant and unusual exclusions either omitted or not given due prominence.
But David Quick, managing director of CETA, said: “We’re a bit surprised about the IDDs but the FSA has said firms had only made minor changes to the prescribed format and wordings. It does not seem to be that onerous. As for the insurance companies, we’ve known since day one they’ve not been following the rules.”