Financial Ombudsman Service award limit increased and remit extended
From 1 April 2019, the previous FOS award limit of £150,000 limit increased to £350,000 for complaints against firms on or after that date. The new award limit came into force at the same time as the extension of the service to larger small and medium-sized enterprises (SMEs). These are firms with an annual turnover of under £6.5 million, an annual balance sheet total of under £5 million, or fewer than 50 employees. An additional 210,000 SMEs will be able to complain to the Financial Ombudsman Service.
Distribution chain report – firms must consider value of the products and services provided to consumers
The FCA is warning General Insurance firms about manufacturing, sales and distribution approaches that can lead to customers purchasing inappropriate products, paying excessive prices or receiving poor service. In a recent report (TR19/2) the regulator has set out the key findings from thematic work on the general insurance distribution chain. Looking at travel, tradesman or GAP/motor ancillary insurance, possible problems included customers paying potentially excessive prices. This was apparently due to parties in the chain receiving remuneration which appeared to significantly exceed the costs incurred in distributing the products and was most prevalent where insurance was linked to another non-financial purchase, such as a car or a holiday. The FCA is now consulting on new guidance for insurance product manufacturers and distributors.
Wholesale Insurance Brokers Market Study report
The FCA has published the report from its Wholesale Insurance Brokers Market Study, which started in 2017 to assess how competition was working in the sector. Overall, the FCA found no evidence of significant levels of harm to merit the introduction of intrusive remedies for the London Insurance Market – which is recognised as one of the largest global centres for placing and underwriting large-scale, complex commercial and specialty risks. However the regulator said there is some scope for improvement including firms’ management of conflicts of interest.
Medical conditions and access to travel insurance – update
The FCA has been working with stakeholders to explore different options for signposting people with pre-existing medical conditions (PEMCs) to travel insurance providers that are able to provide them with suitable insurance. Options are now being considered for new rules to support the effective delivery of improved sign-posting across the market which will be consulted on in due course. The FCA said it will be producing a user-friendly guide to travel insurance for consumers with PEMCs.
Claims management companies now under FCA regulation
The FCA began regulating the claims management industry from 1 April 2019. All claims management companies (CMCs) in England, Scotland and Wales now have to demonstrate they meet and maintain minimum standards set by the FCA. All existing and new CMCs must apply to the FCA for authorisation. More than 900 CMCs have registered for ‘temporary permission’ to continue operating while they go through the FCA authorisation process.