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Daily Insurance Industry News
Saturday 21st of July 2018
October 27, 2011

FSA acts on packaged account insurance

by Gill Montia

Story link: FSA acts on packaged account insurance

The packaged bank account, which commonly includes some kind of insurance cover, has attracted the attention of the Financial Services Authority (FSA).

The regulator estimates that one in five UK adults currently hold this type of account which can come with range of benefits, from insurance to discounts on purchases.

However, customers sometimes find that they are not eligible for the insurance cover elements, and the FSA is consulting on new measures that would mean banks and building societies selling insurance as part of a packaged account have to:

1. Check whether the customer is eligible to claim under each policy and share that information with them.

2. Provide customers with an annual eligibility statement prompting them to check whether their circumstances have changed and whether the policies continue to meet their needs.

3. If the sales adviser is recommending a packaged account they must establish whether each policy is suitable for the customer and alert them if some are not.

The FSA is also asking for feedback on improving price transparency on packaged accounts, as insurance policies are bought wholesale and offered at discounted rates in the overall package.

According to the regulator, this makes it difficult for customers to compare and contrast the costs with standalone insurance products or other bank accounts.

FSA director of policy, Sheila Nicoll, comments: “We want to make sure that packaged accounts are only being sold to customers who have actively decided it is the right product for them.”

 

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