"One of the self-professed aims of GDPR is to strengthen levels of consumer confidence and trust in relation to service providers"
With GDPR set to enforce new standards of data accountability within the financial services sector from the end of May, the need for greater transparency and the provision of clearer product information has become paramount. The general insurance industry in this country generates over £1.7 trillion worth of investments every year (the largest market share in Europe), yet question marks as to the transparency of renewals and pricing continue to draw ire from regulators and consumer watchdogs alike.
In April, for example, the FCA warned that it will take action against companies which fail to implement rules (introduced in April 2017) requiring premiums charged on the previous year to be shown alongside current renewal rates as well as messages encouraging consumers to shop around and find better deals - a threat that seems entirely justified in many cases. For example, recent research conducted by Moneysupermarket has suggested that automatic policy renewals cost motorists somewhere in the region of £650 million (or £50 extra per customer) each year in ‘loyalty tax’, with most of the best deals reserved for new customers.
Losses incurred on these ‘headline’ products are increasingly offset by reductions in cover levels, increases in exclusions and steep rises in amendments, cancellation fees and renewals (the infamous ‘hollowing out’ of policies) meaning that ‘loyal’ customers invariably pay more in the long run. In addition, substandard levels of product information (previously flagged as an area of concern by the FCA in 2014) can distort criteria by placing undue emphasis on price or ease of availability. Which is why it is heartening to hear that the FCA intends to investigate dual pricing policies as part of its 2018/19 business plan.
One of the self-professed aims of GDPR is to strengthen levels of consumer confidence and trust in relation to service providers and there’s no better way to encourage such a shift than by underpinning these changes with a stringent regulatory framework designed to protect the best interests of customers.