For financial services consumers, however, the most important changing fashion has perhaps been that around the principle of caveat emptor and the degree of responsibility they have for their purchases.
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This has been a tough nut for the Financial Services Authority (FSA) to crack and it has evolved its regulatory style to establish a regime that meets the risks faced by consumers, without stifling the innovation that naturally exists in the markets.
The issue has come to the fore again recently for a number of reasons. The FSA has set out its intention to move to a more principles-based environment and has made it clear that firms will be responsible for giving consumers all the information they need to make an informed decision on any particular purchase.
There is also an ongoing drive to educate consumers and ensure they are capable of making those decisions effectively. Speaking recently, FSA supremo John Tiner, said: “Increasingly consumers will be educated to take responsibility for their own actions and while the FSA does not want to lessen the protection it affords them, it is aware of the role they can play to protect themselves.”
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However, the FSA has also expressed concern over the way firms give consumers the information they need. No longer will it be possible for them to put everything into the mountains of documentation they send out, at the expense of explaining things verbally.
This practise is something consumer champion Which? is worried about and it recently highlighted the problems faced by policy holders of travel and protection insurance who regularly find they are not covered when they come to make a claim.
The details of their policy may have been explained in the small print, but too many simply assume that paying for the policy grants them cover in every eventuality. Unless potholes are flagged up in technicolour at the point-of-sale, many consumers blindly drive straight into them when they try to make a claim.
The challenge across the insurance sector therefore remains to provide a sufficient level of information in a suitably digestible form to the buying public. This will enable a balance to be reached over what can reasonably be expected from both parties when it comes to buying and selling policies.
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The problem for the FSA will be in deciding where to draw the line when it comes to assessing complaints and whether providers or consumers must bear ultimate responsibility.
Clearly it is difficult for a consumer to plead ignorance and claim they were unaware of a warranty policy, for example, when it has been showing up on their bank statement for the past 24 months.
Similarly, where absolutely no mention has been made orally or in written communication of the exclusions a policy may carry, providers may find it hard to defend their decision to turn down a claim.
However, how the FSA deals with the incidents, which fall between these two pillars, will be interesting to watch. As it pushes the pendulum of caveat emptor back towards consumers, it must be mindful of the problems it will create if it goes too far.
Indeed, given the problems the market has had in reaching a happy medium between the responsibilities of buyers and sellers in the past, one wonders how long it will be before fashions change again and the FSA seeks to regulate the products sold, rather than the outcomes achieved. Stranger things have happened.
Simon Lance Burgess
Managing director
British Insurance Limited
