The aim of the review is to assess how regulation is affecting the GI market through the Insurance Conduct of Business rules (ICOB) and hopes to assist the regulator to move towards principles-based regulation.
It will also look at the potential risks to consumers in selling payment protection insurance (PPI) and critical illness policies.
Dan Waters, director of retail policy at the FSA, said: “Effectiveness reviews are part of the FSA’s approach seeking to ensure its interventions in the market make a real and beneficial difference in practice. The GI effectiveness review presents a good and timely opportunity to look at ICOB in fine detail from the viewpoint of restricting prescription to the point where it is only demonstrably necessary to meet our consumer protection objective."
The review will judge whether ICOB protects consumers from the sale of ineffective policies and will be published in quarter one of 2007.
irms have welcomed the review.
Simon Burgess, managing director at britishinsurance.com, said: “It’s about time the FSA showed its teeth as there are practices going on that need to be sorted out.”
“Everyone in the past who tried to sort these problems out failed and the FSA is the only organisation with the wherewithal to deal with them.”
Tim Eacott, compliance director at Select & Protect, added: “It’s always right to review what you are doing. There is scope to look at some of the details of ICOB, for example, the demands and needs statement.”
