’There is an increasing need to offer a holistic service to customers,’ says head of HR and compliance
The FCA’s Consumer Duty requirements are creating further doubt amongst professionals offering GI services.
That was according to Source Insurance’s head of HR and compliance Phil Lewis, who said the market had seen a decreasing number of professionals offering GI services over the years.
The Consumer Duty regulations, which come into force on 31 July 2023, sets out a slew of updated regulations for insurance firms and other financial services firms that must be implemented.
Lewis said in a statement yesterday (18 May 2023) that there was an ”increasing need to offer a holistic service to customers – particularly those customers with characteristics of vulnerability”.
However, he said the FCAs Consumer Duty requirements were ”creating further doubt amongst those currently offering GI”.
”This may be offering a disservice to customers, potentially working against the ‘spirit’ of the Consumer Duty, particularly if the decision not to offer GI is driven only by commercial considerations without considering the customer impact,” Lewis added.
Signposting
While Lewis felt commercial considerations were clearly important, he said they “shouldn’t be the sole factor in a decision where there is a risk of poor consumer outcomes”.
And he highlighted brokers “should consider signposting” customers when planning for the regulator’s Consumer Duty.
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He highlighted that in point 5.40 of the FG 22/5 Final non-Handbook Guidance for firms on the Consumer Duty, it stated that “where a firm declines to provide a customer with a particular product or service, the firm should still consider whether there is information or support it could provide to help the customer pursue their financial objectives”.
As a result, Lewis said there was an opportunity for brokers to improve service.
“If you don’t offer a GI service yourself, passing the customer off to a reliable source of information or advice is more likely to result in trust, which is reflected on you,” he said.
“It’s also likely to align with the sentiment behind point 5.40 of FG 22/5 and that of the whole Consumer Duty.
“Giving this some serious consideration should be a part of any brokers’ Consumer Duty planning – and documenting these considerations shows how seriously you’re taking new requirements.”
Meanwhile, Grant Thornton partner and head of financial services Alex Ellerton, pointed out in August 2022 “that the travel insurance signposting rules haven’t been extended to other products, however, firms should consider if they could direct declined applicants to other parties who could provide guidance or support in achieving their objectives”.
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