The regulator’s post implementation review of the Insurance Conduct of Business Sourcebook (ICOBS), published in June, found “significant failures” by firms, particularly in telephone sales of critical illness (CI) plans.
It has written to firms requesting they review their procedures and provide written confirmation within six months that their rules meet ICOBS requirements.
If firms cannot provide confirmation, they must draw up a written plan and timetable outlining when they will be able to meet the rules.
The ICOBS rules state firms ‘‘must take reasonable steps to ensure a customer is given appropriate information about a policy in good time and in a comprehensible form so that the customer can make an informed decision about the arrangements proposed’.
But a mystery shopper exercise it conducted in 2009 with a sample of 11 firms selling CI cover found overall compliance to ICOBS was “unacceptable”. All 11 firms, the FSA found, failed on some or all of its requirements.
The FSA said the results echoed many of the findings from a similar study carried out in 2006.
“The consistency of the findings supports our view that there are continuing problems in how information is provided to consumers at the point of sale,” the FSA’s letter reads.
It also reiterated the ICOBS requirements for all firms to:
- Make appropriate oral disclosures when selling a protection product to a consumer by phone or face-to-face;
- Provide product information in a way which is clear, fair and not misleading; and
- Be clear about the status and scope of service the firm is providing and that any advice given must be suitable
