Context
The FCA undertook this review to gain some assurance that firms had taken appropriate steps to comply with the pricing rules, including implementing appropriate systems and controls to enable them to do so, thereby achieving the intended outcomes.
Key points to note
Indications from the review are that most firms had taken appropriate action to comply with the pricing rules. The findings included:
- Larger firms in the market, mainly insurers, were generally able to show that they had taken appropriate actions to comply with the pricing rules, including appropriate monitoring. When working with firms the FCA found that, although records were compiled, not all the information that was reported to the person responsible for the attestation was made available, in line with the requirements of ICOBS 6B.2.57R.
- Many of the smaller firms in the market had few or no records to show how they had complied with the pricing rules. These firms mainly set the price of additional products sold with home or motor insurance, set fees, or give incentives.
- Some firms provided a statement or limited information asserting that their pricing model, before the pricing rules came into effect, did not differentiate between new and renewing customers. However, in most cases no evidence or records were provided to substantiate how these firms had satisfied themselves that they were and are on an ongoing basis complying with the pricing rules.
- Issues were not identified regarding the firms reviewed in relation to:
- Compliance with the incentives’ rules
- Judgements regarding potentially reportable breaches of the pricing rules, where firms had identified instances of consumers renewing their home or motor insurance policies for a higher price than the equivalent for a new customer.
Next actions
Firms must ensure they hold evidence and are able to demonstrate they are complying with the FCA’s pricing rules.