Dear CEO | Release Date: 14th December 2022
To read a longer summary of this Dear CEO letter, click here.
To access the original FCA document, click here.
Short Summary
The FCA’s “Dear CEO” letter to life insurers articulates heightened expectations in the face of the ongoing cost of living crisis, emphasising the insurers’ critical role in supporting affected consumers. With rising living costs and market volatility significantly impacting consumers, especially the economically vulnerable, life insurers are urged to ensure their products and services support and protect their customers effectively.
The letter sets out specific expectations across various areas:
Protection Products: Insurers must provide clear product information and communicate the implications of financial decisions, such as the potential consequences of cancelling or reducing coverage.
Pensions and Savings: Insurers should clearly inform customers about the impacts of altering pension contributions and the associated long-term risks.
Customer Value: There is an expectation that products, especially annuities and equity release products, offer fair value, reflecting the changing economic environment.
Customer Support: Enhanced support for customers facing financial difficulties is essential, including tailored communications and flexible payment options.
Operational Resilience: Insurers must assess the impact of economic challenges on their operations, ensuring robust support systems for both customers and staff.
Insurers are expected to integrate these standards ahead of the Consumer Duty coming into effect, preparing for rigorous FCA reviews to ensure compliance.
The key take-away for insurers is the urgent need to adapt their practices and products to effectively support customers during economic hardship, ensuring fair value and enhancing operational resilience to meet FCA’s intensified scrutiny.