Insurers will be looking to secure contracts with suppliers who have compliant systems
The Treasury and the FSA have been very clear. In respect of claims handling it is the insurer who is charged with a non-delegable responsibility to comply with the legislation. They will therefore be looking closely at their suppliers to ensure they comply too.
Unlike allegations of miss-selling where many can be affected, with claims almost without exception each claim stands on its own and only one party or individual is affected at a time. The existence of the Financial Ombudsman Service (FOS) as a final means of adjudication for retail and small commercial customers has given the FSA the opportunity to adopt a 'light touch' approach to claims handling. Nonetheless many suppliers will be increasingly familiar with the words "you say you comply, now can you show me please" from insurers.
For many suppliers, the move to evidence-based management will be challenging, but, for well-run businesses that already adopt this approach, requests to "show me" will be familiar. The costs of installing and maintaining systems to evidence all that is required is not however to be underestimated.
Given the operation of the FOS, the compliant supplier will be expected to have an effective complaints system that ensures that all issues of customer dissatisfaction are captured and dealt with promptly and, if not, channeled towards the FOS system with its escalation procedures and time-scales.
A supplier must be able to evidence a capability to deal with a surge of work and to have in place an effective disaster plan to ensure that claimants are not subject to unreasonable delay in the handling of their claims. This appears to present quite a challenge for sole traders, unless they can form alliances.
Suppliers will also need to be able to evidence that their staff are: competent for the work that they do, that their competence is checked regularly, that the work is reviewed to ensure that it remains within the competence of the staff to whom it is allocated, and that then those staff are properly supervised.
The principles are clear but the rules are voluminous. Suppliers' compliance teams will need to go through the regulations clause by clause.
- Graham Burgess is UK technical director at GAB Robins Risk & Compliance