Mobile phone insurance market follow-up probe found some improvements, however this was not the case with many firms
The FCA is considering taking enforcement action against a mobile phone insurance provider, following the findings of a follow-up review on mobile phone insurance.
The regulator said it had also commissioned a third party review of the firm’s practices and controls. It did not name the firm.
Three firms involved in the review have also voluntarily agreed to compensate customers as part of the work being carried out under these action plans.
In the follow-up review published today the FCA said that there were still a range of practices and outcomes taking place within the market.
It follows an initial probe into the mobile phone insurance market in June 2013 when the FCA said it had found examples of poor practice in mobile phone insurance
Today it revealed that some firms had improved their practices, with evidence that customers were now consistently receiving fair outcomes.
However, there were still many firms included in this follow-up review where this was not the case.
- Some firms still required claims forms or other submissions which duplicated information already provided.
- Five firms in the review still appeared to operate a two stage claims process where some claims were routinely declined and any customers complaining were then likely to have that decision overturned.
- Three of the firms in the review paid out on less than 60% of the claims they received.
- Three firms in the sample took over 15 days on average to process and settle successful claims.
- Some firms declined claims solely because of breaches of conditions which were unlikely to relate to the circumstances of the claim, and there were other examples of loss and theft claims which appeared to be declined unfairly.
- Five of the firms in the sample settled claims by repairing phones with non-manufacturer parts, potentially voiding the phone warranty.
- In three firms complaints handling was not sufficiently independent of the rest of the business, increasing the risk that complaints were not handled fairly.
The FCA said: “This is disappointing given our previous work in this area and the clear expectations we set out.”
The FCA noted the improvements that had been made since the first review.
- All of the firms in the review were able to demonstrate how they had changed their policy terms further to the first review to use clearer terms in relation to loss and theft.
- Most firms now used ‘single contact’ claims processes.
- Six firms in the review paid out on over 80% of the claims they received.
- Three firms in the review took three days or less on average to process and settle successful claims.
- None of the firms in the sample declined claims solely because of a failure to report loss or theft to the network.
- All of the firms in the review had improved their training and practices around recording complaints and most firms now carry out appropriate review and root cause analysis of complaints.
Fourteen firms were selected to take part in the follow-up review, including insurers and intermediaries.
They represent the majority of the mobile phone insurance market. Six of the firms had participated in the first review.
The FCA noted that the best performing firms had participated in the first review. However, not all of them were consistently delivering fair outcomes.