FCA warns insurance firms over fair value deadline

Insurance firms may not be ready to implement new product governance rules there to ensure insurance provides fair value, according to a review published recently by the Financial Conduct Authority (FCA).

Part of the FCA’s ongoing work to ensure consumers receive fair value, the review looked at how firms designed, sold and reviewed their products to ensure they met the needs of their customers.

The findings show that some firms had made good progress in meeting the FCA’s existing rules and guidance on product governance and value, issued in 2018 and 2019, as well as against temporary guidance on product value, issued in response to Covid-19 last year.

However, too many firms are not fully meeting the FCA’s standards. In addition, many firms are likely to be unprepared to meet new enhanced rules on product governance, which come into force on 1 October 2021. These new rules are part of a wider package of remedies introduced by the FCA to tackle the loyalty penalty and ensure that firms focus on providing fair value to all their customers.

The review found weaknesses including: Insufficient focus on customers, outcomes and product value, including when considering value in the context of Covid-19, shortcomings in governance and oversight of products.