Many insurance customers may have been sold policies that are completely unsuitable for their needs, an investigation by the FCA has found. 

A report from the Financial Conduct Authorty (FCA) focused on agents who offered home, car and travel insurance products on behalf of big insurance companies. 

These middlemen don’t have to be regulated themselves, but are meant to be closely monitored by the insurance companies which are regulated.

“We found widespread examples of poor practices across the sector,” says Jonathan Davidson, director of retail supervision and authorisations at the FCA.

“In many cases, firms were simply failing to understand and manage the risks arising from their appointed representatives’ activities.”

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Fake signatures and falsified documents

The FCA found that some customers were being sold products they did not need or were not eligible for, and some selling was being done without regard for whether the customer was able to make an informed decision.

In a couple of extreme cases, the FCA found evidence that agents were faking signatures and falsifying documents.

Some agents were found to be selling travel insurance to people with medical conditions that invalidated the insurance. This would mean they weren’t covered if they tried to make a claim.

Two of the 15 firms that the FCA investigated have been ordered to cease business, while another two have been told they have to bring in an expert to thoroughly review their sales and look for evidence of mis-selling.

Over half couldn’t consistently show that they had effective risk management and control measures to identify and manage the risks arising from the activities of these middlemen.

“General insurance is a large and important sector and we are concerned about the potential for customer detriment,” adds Davidson. “All principal firms need to consider these findings and look again at their practices.”

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Could you be entitled to compensation?

The FCA has said it will not look into whether there is a need for customer redress, which could mean some customers are in line for compensation as the result of being mis-sold insurance products.

If you think you may have been sold an unsuitable insurance product – either because you didn’t need it or you weren’t eligible to make a claim – then you should start by making a complaint to the company that sold you the policy. Ask for a copy of its complaints procedure if you can’t find it online.

Make sure you gather all the information you have about the policy and why you think it wasn’t suitable. If the response you get isn’t satisfactory, or you don’t get a response within eight weeks, you can take your case to the Financial Ombudsman Service.

Your complaint will be investigated free of charge, but the decision that the ombudsman reaches will be final. 

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