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News: Room for improvement, says watchdog

A new survey by the Financial Services Authority (FSA) has found that many insurance companies are not yet fully complying with FSA rules on the provision of disclosure documents to customers.

The work involved reviewing the content and format of more than 100 policy summaries and Key Facts documents for motor, household, critical illness, income protection and other types of general insurance.

Problems identified with policy summaries and Key Facts documents included poor quality of style and presentation, making it difficult for customers to read and understand the documents. For example, the cancellation period was frequently omitted from policy summaries.

In addition, significant and unusual exclusions were either omitted or not given due prominence. And for some products the description of the product was frequently too complex or obscurely worded to be meaningful to a customer.

Meanwhile, a parallel survey undertaken by the FSA found that many medium and small sized insurance intermediaries were not complying fully with the rules relating to their provision of Initial Disclosure Documents (IDDs) to customers.

The work with medium-sized and small insurance intermediaries found that 261 (62%) of IDDs reviewed did not comply fully with FSA requirements. Common errors included: omitting the FSA Keyfacts logo, making minor changes to the FSA prescribed wording, or including descriptions of services or information that the FSA does not require firms to provide.

And for consumers there were further examples of errors that were potentially misleading, such as providing inaccurate or no details about access to the Financial Services Compensation Scheme or the Financial Ombudsman Service.

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