The RAC has been reprimanded by FCA, (Financial Conduct Authority) over its failure to make previous breakdown costs prominent and crystal clear, when inviting customers to compare prices, and then take up insurance and breakdown deals at renewal time.
The BBC and mainstream news media are all covering the story today, and it seems likely that the RAC will have to offer compensation to policyholders, after issuing an apology for failing to comply with the 2017 FCA rules. Admiral and John Lewis have also been criticised for not following the FCA rules on renewals, which state that companies must place the previous year’s price right next to the renewal price for the year ahead, so that a direct comparison can be made.
“It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules,” said Jonathan Davidson, an executive director of supervision at the FCA.
An RAC spokesman told the Daily Mail: “While our breakdown policy renewal documentation did accurately contain all the necessary information, we recognise that some of the key information in our letters was not as prominently displayed as it should have been.
“We continue to be committed to giving members clear and fair information so they can make the right decision and are contacting those affected to ensure they are satisfied.”
A spokeswoman for the Association of British Insurers (ABI) said: “Insurers pushed for these rules on renewal information because they want a market that operates in the best interests of consumers. Customers must have the same clear information whether they buy their cover direct or via a broker, bank or comparison website.
OPPORTUNITY TO BUILD BRAND REPUTATIONS
Renewals are one of the big sticking points for the UK insurance industry. Time after time, customers complain thast they are being taken for granted and essentially `milked’ as cash cows. Quite apart from the changes coming in May due to GDPR which will affect data sharing and the matter of customer consent being given to data handling and storage, the issue of high renewals needs to be resolved this year, by all the major players in the motor premiums market.
Here are a couple of typical responses on Twitter;
Simon Perry, Insurance Matters Expert at Quadient commented;
“The RAC should use this clash with the FCA as an opportunity to set themselves apart from others in the market. We live in a time when the consumer is king – every stakeholder within the insurance sector must be confident they are laying the groundwork for excellent customer communication, and full compliance. With IDD and GDPR looming large on the horizon, this period could really prove make-or-break time for insurers running on legacy or inflexible IT platforms, both in terms of remaining compliant, and maintaining consumer confidence.
“Failing to follow this process means insurance companies will run the risk of facing the FCA’s wrath, while damaging valuable customer relationships – who will be more than happy to take their business elsewhere.”