This blog highlights actions being taken by the FCA against insurance companies and their efforts to encourage fair treatment for customers claims. We include a link to take a peak into the proceedings.
Unprecedented times call for similar measures. The Financial Conduct Authority (FCA) are testing insurers reliance on “it’s too big for us to cope” with the promises made in their contracts (aka policy wordings). There is a test case going through the High Court. The process has already started, and some of it is live.
I watched and listened (you can too – see below) as solicitors for the FCA & solicitors for various insurers took part in a pre-court meeting (the 1st Case Management Conference). It was interesting to see one insurers solicitor state that they wanted to use Sweden as an example that would support their argument that they shouldn’t pay claims. Only for the FCA to say that they would use the rest of Europe as an example if they did.
Is this really happening?
Yes, and I am under strict instructions from the FCA to be “balanced” when reporting this. However, that doesn’t stop me thinking about why the FCA are taking this step. I can only imagine it’s to avoid another PPI scandal. The FCA ended up having to deal with that after the banks failed miserably. The banks could not be trusted to deal with it and the FCA are trying to avoid another long running scandal in our Financial Services sector.
Also, there’s a central plank of FCA rules. It’s the one that overrides all others and they call it “treating customers fairly”. The FCA is trying to ensure that insurers follow this, rather than protecting their own finances by refusing to pay out.
When will the results be out?
They are streaming the 2nd “case management conference” on 26th June 2020 and the final hearing starts on 20 July, you can watch on video.
I hope that the outcome is correct because insurers have already tried to avoid paying and are inventing new arguments about why they shouldn’t pay. One would think that the FCA would stamp out any conduct that is not “Treating Customers Fairly”. If they stick to that, all will be well.
If you are interested in the law, the case management conferences will intrigue you.
The FCA is trying to bring conclusions forward. This is the first time they have come up against insurers and it could be a game changer. At least they will find out what the culture in the insurance companies is really like by observing how they behave when under pressure.