The Financial Conduct Authority (FCA) today published a policy statement setting out rules to ban ‘opt-out selling’ – defaulting customers into add-on products. This is designed to improve competition in the market for add-on sales and prevent the “exploitation of customer biases”. The ban will apply across all financial services sectors, and will be in force from 1 April 2016.
The ban on opt-out selling forms one element of the continuing FCA activity in the General Insurance add-ons market. An earlier consultation as part of the FCA’s study of this market concluded last March that competition in add-on markets was not effective and was not working in the best interests of customers. The FCA are also finalising Handbook and non-Handbook guidance to improve the information provided to add-on buyers, designed to encourage more informed and active decision-making by customers. Rules to address identified issues in the Guaranteed Asset Protection Insurance (GAP) market were previously finalised in June 2015, when a discussion paper was also published on introducing potential value measures for general insurance markets.
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