The work involved reviewing the content and format of more than 100 policy summaries and Key Facts documents for motor, household, critical illness, income protection and other types of general insurance. A key focus of the review work was on the appropriateness, prominence and clarity of significant and unusual exclusions, given the potential for consumer detriment in this area.
Problems identified with policy summaries and Key Facts documents included:
· Poor quality of style and presentation, making it difficult for customers to read and understand the documents;
· Not all the required information was included. For example, the cancellation period was frequently omitted from the policy summaries;
· Significant and unusual exclusions either omitted or not given due prominence;
· For some products the description of the product was frequently too complex or obscurely worded to be meaningful to a customer.
Clive Briault, FSA Managing Director of Retail Markets, said:
“Providing consumers with simple, clear and understandable information about products is a key part of our general insurance regime. It is true that the industry is still getting to grips with the new regime but these findings are worrying and we are expecting to see a marked improvement over the coming period.
"We will feed back to firms the detailed findings of the survey to help them improve the quality and clarity of disclosure documents and to ensure that the required material is included as specified by our rules. The feedback will include examples of good and bad practice. 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 action if necessary."
A parallel survey conducted by the FSA found that many medium and small sized insurance intermediaries were not complying fully with the rules relating to their provision of Initial Disclosure Documents (IDDs) to customers.
The work with medium-sized and small insurance intermediaries found that 261 (62%) of IDDs reviewed did not comply fully with FSA requirements. Common errors included: omitting the FSA Keyfacts logo, making minor changes to the FSA prescribed wording, or including descriptions of services or information that the FSA does not require firms to provide. There were further examples of errors that were potentially misleading such as providing inaccurate or no details about access to the Financial Services Compensation Scheme or the Financial Ombudsman Service.
Clive Briault said:
“Many initial disclosure documents reviewed were not fully in line with our requirements and some contained errors that could potentially mislead customers."
The survey indicates that some firms are having difficulty in understanding our disclosure requirements when preparing their documents. We will feed back the findings to the intermediary sector to help firms reach the required standards, and there will be a follow-up review early next year.
