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FSA update rulebook to ensure customers are treated fairly

The Financial Services Authority has revised its handbook on how insurance companies handle with customers to ensure the general public is receiving a fair deal.

The latest version of the FSA's Insurance Conduct of Business (ICOB) sourcebook has been simplified in a number of areas, while others have been greatly enhanced.

In areas where the market is working well such as household, motor, pet and private medical insurance, the FSA focuses on using high-level rules to protect customers.

Products that have been criticised for the way they have been sold to the general public, additional rules have been introduced to improve selling practices. Protection products, particularly critical illness, income protection, term assurance and payment protection insurance (PPI) fall into this category, with the FSA introducing "a new standard to ensure better oral disclosure of key information about policies to help consumers make informed purchasing decisions."

The FSA have also said that there will be a strengthened framework within which the rules governing the selling of PPI will operate and the policy cancellation period will be extended from 14 days to 30 days.

The FSA's Director of Retail Policy and Themes, Dan Waters called the ICOB "another important in more principles-based regulation."

"We have greatly simplified our rules in areas of general insurance markets where outcomes for consumers are generally good. In a few areas, however, like payment protection insurance (PPI), we have responded to continuing market failures and consumer detriment by introducing carefully targeted rules to help ensure that consumers achieve a fair deal", he added.

The new rules will come into force on 6 January 2008, with firms allowed a six-month grace period to meet the required standard.

The new ICOB can be viewed here: http://www.fsa.gov.uk/pubs/policy/ps07_24.pdf