About a month’s salary! Really? Well that was what I was told I needed to spend on an engagement ring. Apparently every woman knows this and woe betide any man who does not spend the prerequisite amount on the sparkling accessory to a proposal.
As you can imagine, the questions start to come, is it salary before or after tax? Should I include bonuses? Should I take into consideration share save and pension?
But as any would be proposer will know, that is just the tip of the iceberg!
What stone (diamond obviously – I learned that one very quickly)? What Cut? What Clarity? What Colour? What Carat? What is the balance of the four? Which is the most important of these measurements? Should I buy certificated? Do I go to the High Street or should I go to a designer?
I know I’m starting to sound more than a little inept, but an engagement ring is the symbol that “I plan to marry…” and that is the single largest decision I had made in my life at that stage – I wanted to get it right!
The word ‘Engagement’ has many uses; most commonly we use it to refer to this agreement to get married; but it is also used when we agree to be somewhere at a set time. Not surprisingly, I am not going to talk about either of those definitions of the word engagement; rather, I want to talk with you on the action of being, or becoming engaged; think in terms of participation and involvement.
Our regulator, the FCA currently speaks with great regularity on the subject of ‘Consumer Engagement’, and rightly so. We have progressed from the ‘old days’ where records were somewhat limited and the level of disclosure equally so and moved into an era when our Customers wish to be much more involved in the process and we see the benefits of clearly explaining what we will do for them and why.
Consumer Engagement takes many forms, from the way we present the necessary disclosure points through to the processes we follow. Needless to say at The Right Mortgage, we do our very best to stay at the forefront of Consumer Engagement providing the necessary guidance where possible.
Consumer Engagement – General Insurance
It cannot have escaped your notice that as of 1st April 2017 new rules will come in to play from the Financial Conduct Authority aimed at improving the level of Consumer Engagement surrounding General Insurance products. I want to take a few moments to explain what they are, how we are impacted and what amendments have been made to our process in light of these regulatory changes.
Firstly, it is worthy of mention that the scope of the following changes are applied to both Insurance companies and intermediaries involved in the selling of General Insurance products with a term of more than 10 months and apply to all forms of General Insurance, including Private Medical Insurance.
Purpose of Changes
The regulator has said that they expect their proposals (now rules) to improve outcomes for consumers who hold a General insurance policy. It is their hope that these changes will help more consumers to shop around at renewal and will make price increases more transparent.
The proposals were intended to address concerns about levels of Consumer Engagement and the treatment of consumers by firms at renewal, and the lack of competition that results from this.
What are the Changes?
- You must disclose last year’s premium at renewal.
- You must include text that encourages consumers to check their cover and shop around for the best deal at each renewal.
- You must identify consumers who have renewed with the provider four times and encourage them, through an additional message, to shop around.
These disclosures apply across all General Insurance lines.
The big question is, who is responsible for making sure that these changes are implemented? In short, it is the responsibility of the ‘Firm’, which, the FCA tells us, can apply to either the Insurer or the Intermediary; or both!
Our insurance partners are currently working hard on the alterations that are required to their processes and documents, but I have been reassured that they will be adding the necessary information to comply with regulation in time for 1st April 2017. Reassuringly this means that the necessary disclosures should be taken care of by the providers.
Adviser Responsibilities
As mentioned already, the responsibility to provide this additional information lies with the insurer or intermediary, whichever is providing the renewal notice to the consumer.
Therefore, if you as an adviser are in anyway involved in the renewal process, it is you who carries the responsibility to ensure that the regulatory responsibilities as recorded in ICOBS are met. However, where the renewal takes place at the hands of the insurer without any input from you, it is they who carry the responsibility for satisfying the regulatory requirements regarding renewal.
Clearly, as is often the case with regulation, there is a need for the adviser to act as a back stop. Practically this means checking that the documentation issued is accurate. Realistically, this will present a challenge because not all providers supply the renewal documentation to the adviser as well as the client; which is why we have arrived at the policy above as we feel this is a reasonable approach to embedding this part of the regulator’s guidance regarding client engagement.
There will, of course, need to be a record of this process on The Key in line with our normal sales process.
Conclusion
On the face of it, this could appear to be another example of the adviser work load increasing. However, I prefer to look on this as an opportunity…
You see, every consumer is now going to be directed to shop around. Therefore whether General Insurance is purchased from a Meerkat, a Pavarotti lookalike or a Red Telephone on wheels, they will be told quite clearly that they should look for a better deal. This also presents an opportunity to explain why they need to consider the intricacies of their policy, like personal possessions, trace and access, excesses and limitations to name just some the Buildings and Contents considerations.
That is where you come in. You have an opportunity to demonstrate that your service is ‘priceless’… a bit like that Diamond Ring I purchased!
