Today sees a very important announcement from the UK pensions, protection and investments industry. It merits detailed consideration by everyone involved in the industry.
The announcement is the introduction of new market standards designed to underpin the industry's commitment to give its customers a fair deal. The standards will be based on three principles: clarity of information, appropriateness of the product purchased and quality of the service provided.
The standards will be set by an ABI committee after consultation with Government, regulators, consumer organisations and the industry. An independent accreditation body is being set up to police the regime – the Pensions, Protection and Investments Accreditation Board (PPIAB).
The initiative has been driven in part by the recognition that there is a need to rebuild consumer confidence in the wake of pension mis-selling. By raising standards and improving the transparency and openness of the sector it is hoped to build the trust and confidence of consumers. It is also believed that the industry has a duty to promote best practice. The standards being developed will prove to be effective in achieving this.
General insurers can say that they have been working hard to improve customer service and satisfaction. However, experience indicates that standards and performance vary within the industry. Independent intermediaries know which companies deliver good service, have efficient claims handling arrangements and have effective complaints resolution arrangements. Equally, they know the companies that do not meet required standards.
The image of insurers varies as a result and this means the overall image of the industry remains neutral, if not somewhat weak. There is a need to improve perceptions.
It is important to have a positive image as otherwise the industry can suffer in many ways. A weak image makes representations on behalf of the industry more difficult. The industry becomes more vulnerable to tax hikes, such as insurance premium tax, and recovery of Government money paid, such as NHS treatment costs.
Research also suggests a weak image can encourage fraudulent claims. Some claimants justify an inflated claim on the basis that the company deserves it: "They do not care about me so why should I care about them."
We need also to recognise that public expectations have changed. Standards of service that were seen as good ten years ago are now inadequate.
People's expectations of service and information are moving towards the American model so: "Have a nice day and see how you can deliver the demanding needs of your customers."