An insurer argued in court that providing clarity of cover for policyholders was anti-competitive, the Financial Conduct Authority (FCA) has said.
The tactic was revealed by FCA CEO Nikhil Rathi (pictured) who was delivering a speech at the Lord Mayor’s City Banquet at Mansion House.
In his speech, Rathi said: “During our Supreme Court case on business interruption, one insurer argued that we were undermining competitiveness of the UK insurance industry by litigating to secure clarity for policyholders.
“Our response was simple, a market in which insurers do not meet their legal obligations to customers will not be a sustainably competitive one.”
Rathi revealed the details as he highlighted the regulator must not be afraid of calling out vested interests in the industry.
“As we embed competitiveness further in our approach, it is vital that we do not compromise on consumer protection, market integrity and competition,” he said.
“Indeed, often arguments are put to us on the grounds of competitiveness that are anything but.
“It is not our role to create or maintain barriers to entry that support short term revenues of incumbent players at the expense of new entrants.”
Consumer Duty effort will be rewarded
Rathi also touched on the regulator’s flagship Consumer Duty policy which he said puts the onus on firms to put good outcomes at the heart of their products and services.
As part of this, Rathi emphasised that putting more effort in now would make life easier for firms once the regime is in place in July.
“Upfront effort from firms should mean fewer rules down the line,” he said.
“We know the timetables are demanding and we will aim to be pragmatic in our oversight of implementation.”
The cost of living crisis will remain a key subject for the FCA and the regulator has already started focused engagement with lenders to make sure they are treating customers properly and taking action when they failed to do so.
And commenting on the regulator’s survey last week of 19,000 people which shows that more expect to struggle in the months ahead, he added that equates to nearly eight million people who are finding paying for the basics a heavy burden – two and a half million more than last year.
Rathi also said the regulator remained ever more vigilant to actors preying on consumers’ vulnerabilities and was intervening at its “fastest pace ever” against problematic financial promotions, eight times more interventions year to date than compared to last year.