RAC must contact affected customers as the FCA finds the firm failed to encourage them to shop around
RAC has been called out by the Financial Conduct Authority (FCA) for failing to follow new transparency rules introduced last year.
The rules state insurers must display a clear message encouraging people to shop around and also plainly show what the customer paid last year compared to the new quote.
The FCA found RAC had failed to display both the prior and current year premiums, and the clear shopping around message in its breakdown policy renewal documentation. The firm will now have to contact more than a million affected customers apologising, with some reported to be receiving financial compensation.
Jonathan Davidson, executive director of supervision – Retail and Authorisations at the FCA said: “It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules. Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.”
The FCA previously warned insurers not the breach the rules in October last year, highlighting fours areas where firms were failing. These were:
· failing to implement the new rules for all products and customers;
· misstating the previous years’ premium;
· leaving out the shopping around message or not presenting it in a way which draws the reader’s attention; and
· firms failing to properly identify all customers who needed renewal information either because of system error or a mistaken interpretation of the type of customer that is captured by our rules.
The FCA stated it now expects all insurers and senior management at these firms to take immediate action to make sure they are compliant. Customers were advised to contact their insurer if they feel they did not receive the correct information.
Davidson added: “We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent. As we said in October, we expect other firms to take notice of these issues, to look at what they are doing and to make sure they are getting it right.”
An RAC spokesperson said: “While our breakdown policy renewal documentation did accurately contain all the necessary information, we recognise that some of the key information in our letters was not as prominently displayed as it should have been.
“We continue to be committed to giving members clear and fair information so they can make the right decision, and are contacting those affected to ensure they are satisfied.”