Did you know that according to the Financial Conduct Authority (FCA), 52% of UK adults (27.3m) showed one or more characteristics of vulnerability (Financial Lives Survey 2022). Drivers such as poor health, experiencing a negative life event, low resilience and low capability were identified as potentially leading to an increased risk of vulnerability.
Usually for consumers, contacting an insurance company follows a negative life event such as being in a serious car accident and subsequently having their car written off, or their house being flooded. These circumstances would be distressing for anyone, but for some the situation could also re-classify them as vulnerable. The FCA has stressed that Insurers and their claims departments must deal with their customers in an appropriate way. For example, in the general insurance sector, the FCA expects firms to ensure that customers are at the centre of the claims process, so that unreasonable delays to claims processing are avoided and fair claims settlements are made.
With complaints rising, firms cannot afford to rest on their laurels
According to the Financial Ombudsman Service (FOS) in 2022/23 there were nearly 40,000 new insurance related complaints, with a significant increase in the number of cases where car insurance consumers complained that their car was worth more than their insurer had given them following a theft or an accident where the car was written off.
With the ongoing Consumer Duty regulatory requirements, the FOS are anticipating an increase in the number of complaints around price and value of insurance products, particularly where products and services that don’t appear to represent good value, are clear outliers compared to other products, or where the pricing seems illogical. Whilst there might be a legitimate reason for charging a particular price, the FOS are expecting to see consumers challenging this, particularly when they feel that other elements of the service are lacking.
A key part of Consumer Duty will see firms continually assess, test, understand and evidence the outcomes their customers are receiving. Without this, it will be impossible to prove they are meeting the requirements. The FCA has indicated that all client communications will need to be continually monitored post-implementation of UK Consumer Duty.
How can Research in Finance help?
Our Communications Compass is a community testing solution designed to ensure that your marketing communication materials are meeting the regulatory requirements. The FCA has indicated that all client communications will need to be continually monitored post-implementation of the duty. Communications Compass allows for both testing and re-testing of specific materials by our proprietary panel of a cross-section of consumers, including vulnerable clients, resulting in a templated report card that reveals a variety of overall indicators, anonymised competitor positioning, suggested improvements, and more.