The FSA reviewed a sample of 43 firms to look at their sales process, systems and controls and whether they were treating customers fairly when selling general insurance over the telephone. This found the standard of sales where the customer called the firm was generally acceptable, although the disclosure of significant exclusions and limitations could be improved.
However, the standard of sales was poor when insurance policies, such as personal accident insurance, health cash plans and accident and sickness insurance, were sold through cold calling. The main weaknesses were found in training programmes, supervision of staff and a lack of management information other than for sales and call volumes.
Vernon Everitt, director of retail themes at the FSA, said: "The quality of cold calling in general insurance sales was disappointing – consumers were pressurised and the benefits of the product were sometimes exaggerated. We expect to see significant improvements when consumers are cold called. Swift action has been taken to deliver those improvements at the firms we visited and we are following up with other firms which use cold calling as part of their sales strategy. The bottom line is that firms must never pressurise consumers into making a rushed decision and must always clearly spell out the nature and limitations of the products.
"Our advice to consumers is this: if you are cold called, do not feel pressured into making a rushed decision, even where 'free periods' or other incentives are on offer. Step back and take all the time you need to make sure the insurance is right for you."
Where problems have been found with cold calling, swift action has been taken to improve the treatment of customers.
This includes:
- voluntary suspension of sales until deficiencies have been rectified;
- reviews of rejected claims to ensure that they had not been rejected where the customer may have been led to believe that they were in fact covered; and
- agreement to assess future claims on the basis of what customers were actually told at the point of sale in cases where the sales person did not follow the sales script.
