- INTRODUCTION
As part of its ongoing supervisory work, and also by way of specific thematic work, the FSA undertakes reviews of certain areas of business. These FSA Reviews include areas where problems have previously become apparent, and also further areas that it considers may present a risk to the FSA's statutory objectives being achieved.
The results of the work enable the FSA to deal with particular sector or industry-wide problems and deficiencies in a risk based and proportionate way.
Results of most of the reviews will be used to provide guidance to firms, including examples of good and bad practices, to enable them to identify areas of concern within their own businesses and address the risks.
- SCOPE AND PURPOSE OF PROJECTS
Firms should be aware that the FSA has published on its website details of:
- the areas that it will particularly be looking at during the conduct of its day to day supervision of general insurance firms; and
- the major thematic work it plans to undertake during 2006/2007 which will be conducted using a combination of consumer research, mystery shopping, desk-based reviews, supervisory visits and monitoring.
- FORTHCOMING GENERAL INSURANCE PROJECTS
The areas that the FSA has listed as those, which it will be paying particular attention to during 2006/2007, are divided into three categories, which are set out below:
- projects that will have particular attention paid to them during supervisory visits that also fall within the FSA's major thematic work for the year;
- projects that do not fall within the major thematic reviews planned for the year but to which firms can expect some attention during supervisory visits; and
- projects that fall within the FSA's major thematic work for the year but have not been listed as matter to which specific attention will be given during supervisory visits. Firms should however be aware that this does not mean that the FSA will not look at these matters during supervisory matters, simply that they have not been highlighted as likely to receive specific attention.
3.1 Projects to be Reviewed in Day-to-Day Supervision of Firms which are also Part of FSA's Major Thematic Work in 2006/2007
Review of Electronic Reporting Forms
The FSA are obtaining feedback on the firms' experience of completing the forms and also looking at the source material and documentation firms use to complete their RMAR return.
The work will be conducted by desk based reviews and supervisory visits with a view to making the forms easier to complete and more focused, with the aim of improving effectiveness and making the FSA easier to do business with.
Sales of Critical Illness Policies
Reviews are to be undertaken to ensure that firms are compliant with the selling practices of these products and that appropriate advice, documentation and product are provided to the customer, with a view to ensuring that the advice provided is suitable and presented in a manner that is clear, fair and not misleading.
This work will be conducted by way of mystery shopping, as well as supervisory visits. Findings of the work will be published together with details of proposed action. In addition, firms should be aware that the Association of British Insurers is currently working on a Statement of Best Practice in this area.
Sales of Payment Protection Policies
Reviews are to be undertaken to ensure compliance with the ICOB rules on selling practices, disclosure and all other relevant rules, ensuring that due regard is had to the interests and fair treatment of customers.
This major thematic project will be conducted only by way of supervisory visits. Key findings, together with details of proposed action will be communicated in due course.
3.2 Projects which are not part of FSA's Major Thematic Work For 2006/2007 but are Listed as Areas for Specific Review in Day-To-Day Supervision of Firms.
Disclosure Documentation
The reviews to be conducted are to ensure that firms are providing appropriate, accurate disclosure documentation to customers in a timely manner. The concern that is being addressed is the failure by firms to treat their customers' fairly (TCF) by communicating with them in a manner that is clear, fair and not mis-leading and ensuring that the advice given is suitable.
Quality of Outsourcing
The FSA aims to assist retail consumers in achieving a fair deal by ensuring that improvements are made to the quality of advice given by compliance consultants to general insurance brokers. The aim is to ensure that consumers ultimately receive a fair deal by ensuring that general insurance brokers understand and implement the requirements.
Controls over Appointed Representatives
Reviews are to be conducted amongst small general insurance businesses to ensure that firms have the right systems and controls in place over their appointed representatives. This will ensure that appointed representatives properly understand and adhere to the requirements.
Complaints Handling
Reviews are to be undertaken to ensure that insurers in the retail market comply with the complaints handling procedures set out in the Dispute Resolution: Complaints section of the FSA Handbook. This will ensure the fair treatment of customers in the handling of their complaints towards the satisfaction of the FSA's Treating Customers Fairly objective.
Training and Competence (T&C)
Reviews are to be conducted to ensure that brokers that conduct general insurance as their main business are compliant with FSA T&C requirements. The reviews aim to ensure that firms are treating their customers fairly and conducting its business with due skill, care and diligence.
Advised and Non-Advised Sales
Reviews are to be undertaken to ensure that firms understand the difference between these two categories and that they are compliant with the relevant ICOB rules that relate to both.
3.3 Projects which are part of FSA's Major Themes in 2006/2007 but have not been Listed for Specific Review During Supervisory Visits
Effectiveness reviews
There is a rolling program of reviews in place to assess how far the FSA requirements are delivering the intended outcomes for consumers.
The reviews will be conducted by way of consumer research, mystery shopping and desk-based reviews to test the effectiveness of the regimes in the marketplace.
Treating Customers Fairly (TCF)
This is a key element in the FSA's retail agenda and includes the following strands:
- Quality of advice;
- TCF management information;
- Relationships between providers and distributors; and
- Implementation of the principles of TCF into businesses.
The reviews will be conducted by way of desk based reviews, mystery shopping and supervisory visits to assess the areas above, following which a paper, together with examples of good and bad practice will be published.
Claims Handling
This project aims to assess the level of insurers' compliance with the required practices with regard to the handling of claims.
This work will be undertaken through a combination of desk-based reviews and supervisory visits.
