Watchdog criticises insurance firms over salesmen

INSURANCE customers could be in line for compensation after a probe by the City watchdog found evidence of mis-selling.

The Financial Conduct Authority (FCA) has been looking into the general insurance sector, which includes a wide range of products such as home, motor and travel insurance.

It focused on the way in which middlemen sell policies to customers on behalf of firms in the general insurance sector. Companies in this sector have a responsibility to make sure these middlemen, or “appointed representatives”, are acting in line with the FCA’s rules.

The FCA wanted to understand the impact of these arrangements on customers, and find out whether companies had assessed the risks and put in place robust systems and controls to oversee their agents’ sales activities.

The watchdog found “significant shortcomings” when it came to firms’ understanding of their responsibilities for their appointed representatives and their control and oversight of their activities.

The watchdog found “poor customer outcomes” including customers buying products they may not need, products they may not be eligible to claim under or customers not being given enough information to make an informed decision.

It said that with the appointed representatives of one firm there was “significant evidence of mis-selling leading to actual customer detriment”.

The FCA said it is considering the need for customer redress and whether further regulatory action is also needed.