10/02/03

Responding to the FSA’s Consultation Paper, published today on product information, the ABI (Association of British Insurers) have questioned whether or not the proposals “offer sufficient improvement to the current situation, to justify their costs”.

The FSA clearly recognise the role of the Raising Standards quality mark scheme, suggesting that, because a core of the industry is already adopting the scheme, “many consumers will increasingly look towards products with clearer disclosure material – even if our [FSA] proposals are not implemented”. Despite this the FSA is calling for companies to make further considerable changes to their practices and literature.

Mary Francis, Director General of the ABI said:

“Big improvements in product literature have been delivered over the last 18 months as part of the industry’s own Raising Standards quality mark scheme. We urge the FSA not to replace one set of prescriptive rules with another. We question whether these proposals – costing over £100m – are consistent with the Sandler report’s emphasis on low cost, simple and flexible products.”

The anticipated costs of £100 million represents 1% of one year’s new business for the life insurance industry.

Stuart Tragheim, Director of Raising Standards, said:

“The FSA appreciates the improvements made through Raising Standards, suggesting that even without their proposals, market forces would ensure that all life offices would bring their disclosure practices in line with Raising Standards. 

“Accredited brands are in a strong position. Their customers already benefit from the Raising Standards experience, of which improvements to sales literature is only one part.”

Provided by the ABI