The Financial Conduct Authority (FCA) has rejected calls to require signposting for consumers who are denied insurance cover because of pre-existing health problems.
The regulator already requires signposting in the travel insurance market for people with medical conditions.
However despite significant requests to its last consultation, the FCA declined to replicate the move more widely in its incoming Consumer Duty, instead noting that it expects firms to “consider” signposting customers.
Several respondents had urged the FCA to expand the signposting requirement introduced for travel insurance firms in its policy statement on signposting to travel insurance for consumers with medical conditions.
“They argued that we should require other types of insurance firms to provide signposting when they decline a customer cover,” the FCA said.
“They felt that simply declining a customer is a bad outcome and that customers with characteristics of vulnerability, particularly those with pre‑existing health problems, are disproportionately affected.
“Customers who are declined cover can often assume that they are uninsurable, when in fact there are alternative options that may suit their needs,” it added.
But in responding to the requests for mandatory signposting, the FCA took a much lighter approach to the issue.
“We recognise the calls for additional signposting requirements and have introduced new handbook guidance designed to improve outcomes for customers who are declined access to a product or service,” it said.
“When a firm declines a customer access, we expect them to consider that customer’s financial objectives and, where appropriate, provide them with information to help them achieve those objectives.
“We expect firms to use their judgement, so we have not prescribed what information firms should share in different circumstances, but we have included guidance to help firms understand our expectations.
“For example, in certain situations it may be appropriate to signpost customers to MoneyHelper guidance,” it added.
Disclosure requirements
Regarding existing disclosure requirements, the FCA made clear it is requiring firms to “think more widely about the purpose of their communications, and the outcomes they are focused on, to meet its expectations” under the duty.
According to the regulator, where firms must communicate complex information to comply with other disclosure requirements, they should consider what additional steps they can take to support consumer understanding.
The FCA gives the example of a “layered” approach which can be helpful in providing context or explaining key information upfront in a simple way – such as in a cover letter, signposting more detailed information that consumers may want to consider or may be helpful for reference at a later date.
Some disclosure requirements, the FCA said, provide a framework or template for firms to present key information about their products and services, but there are areas where firms have discretion to decide what this key information is or how to explain it.
It added: “Where firms have this discretion, they should follow the high‑level rules and guidance under this outcome. So, for example, firms must ensure that these explanations are likely to be understood by customers and equip them to make effective, timely and properly informed decisions”.
The FCA further pointed out that this outcome is also broader than other specific disclosure requirements and applies to all communications provided to consumers.
This includes verbally, such as during conversations with advisers, online, in letters or product terms and conditions. Firms should consider their communications as a whole and ensure they meet expectations under this outcome.
