UK Car Insurance Regulation
UPDATE: The FSA has now become two separate regulatory authorities and their site is no longer updated. The Financial Conduct Authority (FCA) regulate the financial services industry in the UK. Their aim is to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers. The FCA regulates companies in many different ways. One way is by providing each business with The Principles for the Conduct of Business, which considers the following elements (see below).
The Prudential Regulation Authority (PRA) is a part of the Bank of England and responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. It sets standards and supervises financial institutions at the level of the individual firm.
The Money Advice Service – UK Car Insurance
A very useful resource and a great place to pick-up free and unbiased car insurance information is provided by the Money Advice Service. This is an organisation that provides money advice for consumers in the United Kingdom.
Financial Ombudsman Service – FOS
Should you feel the need to complain about the services delivered by your car insurance partner, there are several important guidelines you need to be aware of before making any rash decisions.The primary role of The Financial Ombudsman Service (FOS) is to investigate complaints about (most) financial products and services provided in or from the UK, including motor insurance.
The Association of British Insurers
The ABI (Association of British Insurers) represents the collective interests of the UK’s insurance industry. Formed in 1985 when a number of existing industry bodies joined together, the Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry.
Choosing to purchase your next car insurance policy from a regulated insurer has benefits both in the short and long term. Before a seller can offer you its (UK car insurance) services, it must be authorised by the relevant regulatory body or be awaiting authorisation. To receive approval it must fulfil a number of requirements based on its professionalism and competence:
A firm must conduct its business with integrity
2. Skill, care and diligence
A firm must conduct its business with due skill, care and diligence
3. Management and control
A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
4. Financial prudence
A firm must maintain adequate financial resources.
5. Market conduct
A firm must observe proper standards of market conduct
6. Customers’ interests
A firm must pay due regard to the interests of its customers and treat them fairly.
7. Communications with clients
A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
8. Conflicts of interest
A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
9. Customer: Relationships of trust
A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.
10. Clients’ assets
A firm must arrange adequate protection for client’s assets when it is responsible for them
11. Relations with regulators
A firm must deal with its regulators in an open and co-operative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice.
Motor insurance consumers in the UK now have the right to cancel any policy with 14 days of purchase, whereas previously you were able to cancel within a fortnight only if you could prove that you had been given misleading information when being sold the policy.
Who is the FCA?
The FCA want consumers to use financial services with confidence and have products that meet their needs, from firms and individuals they can trust. To achieve this, the FCA regulate firms and financial advisers so that markets and financial systems remain sound, stable and resilient. They also encourage transparent pricing that’s easy for everyone to understand. Their stated aim is to help firms put the interests of their customers and the integrity of the market at the core of what they do.
Who is the PRA?
The PRA’s approach to regulation and supervision has three characteristics:
• A judgement-based approach: The PRA uses judgement in determining whether financial firms are safe and sound, whether insurers provide appropriate protection for policyholders and whether firms continue to meet the Threshold Conditions.
• A forward-looking approach: The PRA assesses firms not just against current risks, but also against those that could plausibly arise in the future. Where the PRA judges it necessary to intervene, it generally aims to do so at an early stage.
• A focused approach: The PRA focuses on those issues and those firms that pose the greatest risk to the stability of the UK financial system and policyholders.