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Home > Opinion > Hal Austin

Double standards

This week the prime minister held a summit at Number 10 to discuss the continuing problems of motor insurance – and about time.

By Hal Austin | Published Feb 16, 2012 | Your Industry | comments

The light-touch regulation of motor insurance, as has been pointed out here in Financial Adviser, has been an ongoing scandal for years.

And, when compared with the over-regulation of financial advisers, it gives credence to the often repeated claim that the City regulator and the general insurers have no respect for the IFA community.

But, when compared with most general insurance brokers and the lack of transparency and corporate discipline in motor insurance, IFAs are like angels.

The consensus is that the so-called claims culture and the vultures who feed off this criminality – from claims companies to the general public who see an opportunity to make a quick buck – are behind the ever-rising premiums decent motorists have to pay every year.

But that is a convenient excuse. It is the culture of the industry that is in need of reform: providers taking money off motorists knowing full well that there will be question marks if they come to claim; providers cancelling policies without notifying the insured, leaving them to drive on the streets uninsured; traffic police who are aware of the one or two companies who are the main culprits but who refuse to blow the whistle.

This is the root of the problem, the lack of transparency, a regulator that often avoids taking responsibility and even the courts, who see offenders as the culprits, rather than misleading providers.

All this can be remedied in simple ways. The same way that a financial adviser has to produce evidence of having advised a client, then those motor insurers who do business by telephone through call centres should be compelled to produce the tapes as evidence of the conversation - and it should form part of the contract between the two parties.

That is not too much to ask.

The conscious objectors

Financial advisers and firms are reacting positively to the joint Fiscal Engineers/Financial quality of trust campaign.

A number of leading organisations and politicians have also registered their support for the campaign and others have privately indicated their backing.

However, missing are a number of prominent organisations and individuals who normally are very vocal about consumer rights but find it difficult giving their backing to the campaign, because of the association with a rival body.

They have somehow mistaken taking an ethical stand with taking a political position on a matter that is of minor significance when compared with the wider issue of the popular reputation of the sector.

However, it is a campaign that is on a roll and one that should gain the backing of all those who care about how the industry is seen by the general public as we go forward.

COMMENT AND REACTION

Our Columnists

Ashley Wassall

Ashley is editor of FTAdviser and writes on all areas of retail finance. Previously supplements editor at Money Management and editor of a European private equity publication.

John Kenchington

John is editor of Investment Adviser and has written about investments for several years. He has worked at titles including City AM and was recently named in the MHP 30 To Watch list of up-and-coming media names.

Jon Cudby

Jon is editor of Money Management and has 12 years' experience covering retail personal finance. In 2005, Jon was launch editor of FTAdviser and most recently he was head of online content for Incisive Media's financial services titles.

Tony Hazell

Tony is a freelance financial journalist, having been editor of Money Mail at the Daily Mail for a number of years. He has been writing a column in Financial Adviser since 2005.

John Lappin

John is a weekly contributor to Investment Adviser with 15 years’ experience in financial journalism and 10 years writing on the IFA sector. He was formerly editor of an IFA trade magazine.

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