UK: Pinsent Masons Insurance Briefing - Financial Ombudsman Gearing Up for More Complaints Ahead of PPI Deadline

Last Updated: 23 August 2017
Article by Nicholas Bradley, Colin Read and Alexis Roberts

Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments published on Out-Law - with analysis and commentary from the insurance team at Pinsent Masons.

The six topics of focus this fortnight include:

Financial ombudsman gearing up for more complaints ahead of PPI deadline

The Financial Ombudsman Service (FOS) is anticipating a "significant increase in demand" for its services in the run-up to the August 2019 deadline for complaints about potentially mis-sold payment protection insurance (PPI). The service has received 20,000 new PPI-related complaints since it published its annual report in March, just after the Financial Conduct Authority (FCA) confirmed new rules and guidance about PPI and a two-year deadline for complaints about historical mis-selling. These new rules follow on from the Supreme Court's 2014 decision in the Plevin case, have provided "greater certainty" about how financial firms should handle claims dealing with PPI commission and profit share, according to principal ombudsman Richard Thompson. Read more...

UN-backed group takes action to encourage 'sustainable' insurance industry

An international group of insurance supervisors and regulators, backed by the United Nations' environmental funding programme, has published a five-step framework aimed at making the insurance industry more sustainable. The Sustainable Insurance Forum (SIF) recognises the role that the global insurance sector will play in transitioning to a low-carbon, resilient and sustainable global economy, both in terms of the risks that it covers and the investments that it makes. Its new report urges insurance supervisors and regulators to make an initial assessment; then to better incorporate environmental factors into firm-level supervision and system-level stress testing. They should also improve the data they gather from the firms that they supervise to get a better idea of their exposure to climate change and other sustainability risks; and do more to support and break down regulatory barriers to 'green' investment. Read more...

Industry and government making progress on plans to tackle insurance fraud

Progress was made last year on all of the recommendations put forward by a government-backed task force set up to address insurance fraud, according to a new report. Notable initiatives in 2016 included revisions to industry best practice guidance on application fraud, and commitments by the insurance industry to extend funding support for the Insurance Fraud Register for a further three years, until 2019/20, according to the report by HM Treasury. The Insurance Fraud Taskforce was set up by the government in January 2015 to investigate the causes of and recommend solutions to reduce the level of insurance fraud. It was chaired by David Hertzell of the Law Commission and made up of representatives from the Association of British Insurers (ABI), the British Insurance Brokers' Association (BIBA), Insurance Fraud Bureau, Financial Services Consumer Panel, Citizens Advice and the Financial Ombudsman Service. Read more...

PRA anticipating 'difficult prioritisation decisions' during Brexit process

Managing the extra work likely as a result of the UK's departure from the EU is likely to create a "material extra burden" for the UK's banking and insurance supervisor, its chief executive has warned MPs. Bank of England deputy governor Sam Woods used a letter to the Treasury Committee to repeat calls for "some form of implementation period" for post-Brexit arrangements, in order to "give UK and EU firms more time to make the necessary changes to adjust to the UK's new relationship with the EU in an orderly way". Woods said that issues arising from the UK's exit from the EU "pose a material risk" to the objectives of the Prudential Regulation Authority (PRA), making this area of work a "top priority" for the regulator. Read more...

FCA outlines Insurance Distribution Directive changes for all insurance firms

LEGAL UPDATE: The Financial Conduct Authority (FCA)'s second consultation on implementation of the Insurance Distribution Directive (IDD) deals with important upcoming regulatory change applicable to all insurance firms, as well as further proposed changes to its Handbook for general insurers only. The FCA has now confirmed that it will require the new Insurance Product Information Document (IPID) to be provided to general insurance consumers only and not commercial customers. It has also confirmed that, because of its existing regulation in these areas, it expects rule changes in the areas of managing conflicts of interest and product oversight and guidance, to have a low impact on firms' practices. But the regulatory change outlined in each of the FCA's first, second and a newly announced third consultation should be noted carefully by all firms. Read more...

FCA outlines Insurance Distribution Directive changes for life and investment insurance

LEGAL UPDATE: The Financial Conduct Authority (FCA) has published a second consultation on the Insurance Distribution Directive (IDD), this time focusing on the impact on life and investment insurance firms. The conduct of business sourcebook (COBS) will change largely in line with changes proposed for general insurers including the implementation of the new 'customer's best interest rule' into COBS 2.1. The FCA said that it wants to align IDD rules for firms selling insurance-based investment products (IBIPs)  with the revised Markets in Financial Instruments Directive (MiFID II) standards and that IDD rules and MiFID rules will often be integrated into the same section of the sourcebook. The FCA has chosen to exercise derogations available to it under the IDD so that IBIP firms advising professional clients will not have to provide a suitability statement, and  non-complex IBIPs can be sold without a suitability or appropriateness assessment, meaning on an execution-only basis. The consultation closes on 20 October and a further IDD consultation is expected in late September. Read more...

Find the briefing online here. For regular comments, news and views from the insurance team at Pinsent Masons, see our insurance content on Out-law here.

You may also be interested in:
Investment Management Brief - 10 August 2017  
Financial Services Enforcement Monthly Publication - July 2017
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