As AXA announced plans to move 230 more jobs to India this week, doubts were raised about the FSA's ability to ensure that outsourced call centres meet compliance standards.
Amid a climate of growing concern, suggested solutions to the problem have included stationing FSA investigators in India to patrol call centres and check they come up to scratch.Indeed, with Norwich Union (NU), Allianz Cornhill, Royal and Sun Alliance (R&SA) and AXA all taking the step of moving hundreds, and in NU's case thousands, of jobs to Asia, the issue of ensuring outsourced call centres meet FSA standards is becoming increasingly pertinent. Under the terms of the Insurance Mediation Directive (IMD), the FSA will regulate insurance mediation activities, as well as some claims handling activities, from 14 January 2005. Consequently, according to law firm Denton Wilde Sapte, the FSA will authorise "anyone whose activities include arranging sales in, advising on, or assisting in the administration and performance of insurance contracts".
Administering contractsCila is one industry body that argues, as a result of the IMD, the FSA should be carrying out spot checks at overseas call centres. In support of its case, Cila has highlighted the fact that there will be thousands of people in call centres in India who will be involved in advising on, selling and administering insurance contracts and will therefore need to be regulated by the FSA. "When investigating complaints, the FSA will have the power to go into organisations to examine records and tapes. If you've got 10,000 to 15,000 people in India assisting in the administration and performance of insurance contracts, the FSA will need people in India," says Cila deputy president Andy King. But the FSA begs to differ, arguing that its position has been misinterpreted. An FSA spokesman says: "When we say anyone [involved in the administration and performance of insurance contracts] we are referring to the insurers themselves rather than every single insurer and operator within the company."
Same comtrolsThe FSA says it is the responsibility of the insurer to ensure that the company it outsources to meets FSA standards. "Insurers must ensure that the business that is outsourced is under the same controls as if the business were in house," says the FSA spokesman.The FSA acknowledges that there has been a degree of confusion over the issue. "We would like to clear this up. Our rules don't directly affect those companies [to which insurers outsource]. It's indirect regulation. "The FSA can say to an insurer that its contract with an outsourcing company has to be X,Y and Z. If the contract doesn't meet those criteria, you have to get a contract that does." When it comes to ensuring that overseas call centres meet compliance standards, the FSA lays the responsibility squarely at the feet of insurers. The FSA spokesman says: "It's generally an issue for the insurers themselves. We're not going to step in, take over and monitor the contract. Senior management need to keep a grip on outsourcing - it's not the FSA's role since companies such as Capita, for example, are not financial services companies." But doubts have already been expressed about insurers' ability to maintain standards at offshore call centres. A report published this month by research firm Contact-Babel says that UK call centre staff answer 25% more calls an hour than their counterparts in Indian call centres. Trade unions have also warned that service could suffer as insurers rush to move jobs overseas. Communication Workers Union (CWU) deputy general secretary Jeannie Drake has warned insurers about what she terms a "race to the bottom". Drake says: "The ContactBabel report vindicates our view that customer satisfaction and quality of service must not be sacrificed. The scramble for big savings in the short term will backfire in the long run."
Sending accountantsFor its part, the FSA says it will take action if doubts are raised about standards at overseas call centres. But this will stop short of sending FSA representatives out to India to carry out inspections, says the FSA. "If we have concerns we can set up a skilled person's report which may involve sending in accountants," says the FSA spokesman.But Cila argues that skilled person's reports may not be enough if the FSA wants to quickly resolve problems at call centres in India. King says: "If you want rapid investigation and resolution of complaints, the FSA will need people on the ground in India."
The FSA approach to outsourcingThe FSA's outsourcing policy applies to the use of third parties to provide services, including "the provision of services that were never in-house in the first place".
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UK v India - How call centre performance variesResearch carried out by ContactBabel suggests that call centre standards in India are not as high as they are in the UK. Forty-four Indian call centres were surveyed in the report.
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