Survey shows two thirds of brokers failing to meet documentary information rules
The FSA has warned brokers and insurers to improve the quality of documentary information provided to customers or face enforcement action.
The threat came after a survey by the regulator found a number of brokers and insurers failing to comply with the FSA's rules on the provision of initial disclosure documents (IDD).
Nearly two-thirds (62%) of small and medium-sized brokers were found to be failing to comply with the IDD rules.
The FSA's disclosure requirements deal with issues such as the explanation of significant exclusions and cancellation period details.
Problems identified by the FSA included documents that were difficult to understand and the omission of required information.
Common errors by brokers included omitting the FSA 'keyfacts' logo and making minor changes to the FSA prescribed wording.
Clive Briault, managing director of retail markets at the FSA, said: "These findings are worrying and we are expecting to see a marked improvement over the coming period."
He added: "We will continue to monitor quality.
"If it is found that some firms continue in these failings, appropriate action will be taken, including enforcement action if necessary."
Alex Peterkin, a director of compliance specialist FSA Solutions, said brokers needed to be careful not to use a keyfacts logo on documentation without checking that it meets the FSA's requirements. "Firms need to go back to their terms of business agreements to make sure they comply," she said.
The ABI said it would be discussing the challenges with the FSA.
Biba alarmed at ICOB proposals
Biba has raised concerns over the FSA's plans to alter the insurance conduct of business (ICOB) rules.
The FSA's latest quarterly consultation paper CP05/14 proposes changes including the removal of insurers' status disclosure requirements for retail customers.
The FSA also plans to shelve insurers' requirements to give demands and needs statements for non-advised sales to retail customers.
Steve White, head of compliance and training at Biba, said: "These proposals could very well conflict with the FSA's statutory obligations."
