But Martin Wheatley called on the industry to do more to ease the burden on customers
Insurers are planning to reduce the amount of information in their terms and conditions to just two pages - to help ease the burden on customers confused by long insurance contracts.
FCA chief executive Martin Wheatley welcomed the plans during his speech at the general insurance sector conference this morning and pledged his support to the “open source” approach by insurers.
He said: “Can I say how welcome it is that some of our insurance firms are looking at the possibility of two-page terms and conditions.”
Previously Wheatley had accused insurers of producing contracts “that are longer than Hamlet” which consumers did not understand.
This morning he repeated his call for the industry to take more responsibility to understand the behaviour of customers, who avoid reading contracts in full when faced with complex wordings.
He also cited an example that 20% of financial service customers do not understand if a higher or lower APR represents a better offer.
“As an industry we have to recognise that and engage with the responsibility we all have in understanding how consumers behave,” Wheatley added. “The challenge for us is that most people do not read these documents and if they do comprehension is often an issue.
“People do not engage to the level that you or your lawyers would like them to with the details of terms and conditions that are an essential part of the products.
“We have done a lot of work with FCA on behavioural economics – but a sizeable chunk of future progress has to be industry led, as new technology and attitudes to transparency creates different models of customer services.”