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FCA warns insurers on consumer outcomes

The Financial Conduct Authority has written to all insurance firms reminding them of their need to check that their products provide fair value to customers and highlighting the fact that some guaranteed asset protection products may be failing to provide such value.

The warning came with the publication of the regulator’s latest insurance value measures data, which revealed potential concerns over the value of GAP products, which are sold as an add-on to motor insurance. The FCA found that only 6% of the premiums collected are paid out in claims, while up to 70% can be paid in commission to parties in the distribution chain.

Matt Brewis, director of insurance at FCA, said: “This is an early signal of the work we’ll be doing under the Consumer Duty. Customers should be reassured that we’re in their corner and are taking action where we see poor value being provided. If the firms are unable to prove they’re providing fair value to their customers, they should expect further action from the regulator.”

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