The FCA found several firms failed on due diligence when delegating
Many insurance firms and intermediaries fail to adequately consider their regulatory obligations when it comes to outsourcing work to third parties, an FCA review has found.
The review, published today, revealed that some firms do not treat arrangements of delegated authorities as outsourcing.
Some insurers failed to carry out any conduct-focused due diligence when selecting third parties, while others had not fully considered whether the products they underwrite treat customers fairly, in terms of both value and service.
“All firms must ensure they have appropriate oversight of outsourced arrangements and meet their wider responsibilities to deliver fair customer outcomes, said FCA acting director of supervision Linda Woodall.
“We expect firms to consider the findings of the report and make any necessary changes to ensure customers are treated fairly.”
The FCA also found some firms were guilty of insufficient oversight of the performance of products and the delivery of services.
The study reviewed 12 insurers’ outsourced underwriting and claims handling arrangements, as well as the associated activities of 19 intermediaries and third-party administrators.