The Notebook: What a house fire can teach the FCA about consumer duty breaches
Where the City’s movers and shakers have their say. Today, Lucy McNulty, editor of podcast Following the Rules, takes the Notebook pen to discuss the FCA, John Lewis’s new interview process, and a podcast recommendation.
The FCA should look to insurance claimants for consumer duty breaches
A few months after a friend moved out of her house, it was gutted by fire. As it was a mid-terrace house, the blaze also caused significant damage to the two houses either side. Two years on, an ongoing wrangle over who owes who what has meant the three properties remain uninhabitable.
Why am I telling you this? Because I recently heard that an insurer had offered to pay a sum amounting to a mere two per cent of the market value of one of these properties in compensation to its owner. And when discussing this with brokers, it became clear that the insurer in question is well known in the market for building a successful business around being tight on payouts.
It seems wrong that such information should be widely known by insurers but not by those they insure. Building a business model around low-balling customers is also blatantly at odds with the principles of the UK’s new consumer duty, which has placed more responsibility on firms to treat their customers fairly since its introduction last year.
The UK’s Financial Conduct Authority (FCA) has said it will “take robust action” where needed to enforce compliance with these new rules. And the FCA’s chief has made clear that the insurance sector is a focus of such potential enforcement with his staff asking questions around the price and value of certain insurance products.
But more questions should also be asked about the aftercare provided to insurers’ customers. After all, when it comes to insurance it’s only the aftercare that really matters.
The FCA has plenty of data to hand. Companies must tell the watchdog if they have received 500 or more complaints within six months, or 1,000 or more within a year.
And while there are sensible reasons why insurers may be unwilling to pay claimants, including misrepresentation or fraud, those that feel they have been mistreated can also complain to the Financial Ombudsman Service (FOS). The FOS flags concerning trends to the FCA.
Enforcement action where there are legitimate concerns about a company’s treatment of claimants would help to send an arguably much-needed message to both the industry and its customers about the standards of behaviour now expected.
Attestations – a tool to gather intel on City miscreants?
City execs have long been required to sign legal documents attesting their compliance with certain behavioural standards or corporate policies.
Now a new application has been proposed. Alex Viall of tech firm Global Relay told the Following the Rules podcast that attestations could also help City bosses gather information on employees’ non-financial misconduct amidst the FCA’s crackdown.
“A number of firms will not have this information and attestations may be a way for firms to start capturing the incidents that the FCA is asking for transparency about,” he says. “Saying, ‘please confirm to me you haven’t behaved in this way in the last 12 months’, it’s another way of collecting that information.”
Of course, the success of such an approach rides on the efficiency of the due diligence processes in place to dissuade miscreants from deliberately – or unwittingly – lying when asked to confirm such information.
But with such processes in place, this could prove a useful starting point in information gathering for companies now struggling to determine how to provide the FCA with the information it wants.
Open book interviews: a win for inclusivity?
The news that UK retail giant John Lewis Partnership has sought to ease prospective employees’ nerves by offering every candidate advance sight of their interview questions has been met with a mixed reaction. To some, it’s an innovation that will foster inclusivity in its workplace. To others, it will simply allow more privileged candidates to better prepare. Regardless of your views, if we are to diversify our workforce, we need to come up with some new ideas and, if nothing else, John Lewis has done that.
Quote of the week:
Hardly any banks do it well
Bank of England’s Rebecca Jackson warns that UK lenders are not properly calculating their exposure to private equity
What I’ve been listening to
I recently came across this podcast series and found myself hooked. Hosted by Sarah Ellis and Helen Tupper, the co-authors of a best-selling book by the same name, it is a weekly show offering practical career guidance and relatable career development tools for today’s professional masses.
Although it is billed as a show for those whose working lives have followed unpredictable paths, it has relevance to anyone seeking to determine what career success means to them and how best to achieve it. Episodes are an accessible half an hour in length and there is a huge 397-episode archive too, all of which helps make the series akin to having an on-tap career coach in your pocket for those so inclined.