The rules and principles which apply

The Consumer Duty support outcome requires that customers do not experience unreasonable barriers to changing product or switching provider, and focuses on the after sales service provided to customers.

ICOBS also provides certain rules that firms must comply with relating to renewals, mid term adjustments and cancellations which should be read in conjunction with the guidance in this section. Please refer to the following sections of the manual for more information on these requirements:

Section B.7	Renewals
Section B.8	Mid-term adjustments
Section B.14	Cancellations

Although the specific emphasis under the outcome is on switching products/providers, claiming and complaining, it is important for firms to consider its impact upon post sales service as a whole.

The types of issues which have been raised about customer outcomes in the delivery of post sales service include:

• The steps which firms take to understand, manage and, where appropriate, fulfil customers’ expectations of the firm after the point of sale.
• How firms ensure that services are provided and customer requests processed in a timely manner.
• How firms ensure that the channel(s) of support they use are effective for its target market(s) and customers with characteristics of vulnerability.
• How firms ensure an effective flow of information to customers is maintained and recorded (including verbal discussions).
• How firms ensure the fair treatment of its customers in the renewal process, specifically:
  • making the customer aware of any significant changes and new exclusions to their policy – this includes any ‘extras’ such as legal cover or courtesy car hire, which may be included free in the first year, but will be charged for in subsequent years; and
  • continuing to ensure that the product offered is suitable for the customer and meets their needs, considering that customer characteristics and needs can change over a period of time.
• How firms ensure cancellations are handled in a way which ensures that customers are not prevented from cancelling due to overly complex cancellation processes or poor channels of communication or excessive exit fees.
• Ensuring customers do not experience unreasonable costs associated with the provision of services and ensuring and that any fee charged for the provision of services is made clear to the customer at the point of sale and that associated costs relating to the provision of after sale services do not lead to the product costing more than the customer expected at the time of purchase.

How this may affect you

This is obviously an area which encompasses a large number of processes for brokers and one where practice will vary significantly from business to business. The following points are good practice which we recommend firms should consider in demonstrating appropriate systems and controls. As always, firms will need to determine which will be applicable to their business and the specifics of how these should be implemented and monitored.

Post sales service (generally)

• Establish a written process for post sales service with defined service levels governing how quickly enquiries / queries / MTAs etc. will be handled, by whom and what type of information will be provided.
• Ensure staff are adequately trained in all relevant aspects of the firms after sales service.
• Consider the different channels of support provided (i.e., telephone, in-branch, client visits, online, digital etc.) and how effective these are for designated target markets – consider whether communication and support channels need to be improved or developed.
• Consider support channels and processes in relation to characteristics of vulnerability that have been identified within specific target markets and respond to these accordingly.
• Where information is gathered from the customer (for example, in an MTA or claim), firms should consider how this is to be recorded so that it may be taken into account in any future dealings with the customer including, of course, renewal of the policy.
• Where service standards are set, consider publishing these to the customer together with information about how to contact the firm for after sales service, whether this be an enquiry, an MTA or cancellation, etc.
• Measure actual practice against the firm’s service levels and written processes to monitor success and gather appropriate Management Information.
• Use the results of management information to continually improve customer experience and to address any issues that are identified (either individual or systemic) by providing clear explanations, solutions and where necessary redress to affected customers or groups of customers.
• Ensure that all issues with providers or third parties are identified (e.g., renewal information provided is inaccurate or late, premiums returned are incorrect or slow to be returned); firms should consider having in place a process to provide feedback to the insurer and, where issues are not addressed, should consider whether to continue dealing with the provider concerned.

Cancellations and amendments

• Establish a written process for handling cancellations and amendments with defined service levels and timescales.
• Ensure customers are provided with clear information on how to cancel or amend their policy and that the process for doing so is not unreasonably complex or difficult for the customer.
• Measure actual practice against the firm’s service levels and written processes to monitor success and gather appropriate Management Information.
• Where firms charge for cancellation and amendments, ensure these fees are fully disclosed to the customer in a prominent and clear manner and are justifiable and proportionate in relation to the services provided.
• Check the levels of fees charged against the market (as a benchmark) but more importantly assess the impact of your fees or charges on the value of the product, to ensure these are reasonable and fair.
• Include a process for establishing the reasons why policies are cancelled mid-term or not taken up in order to monitor any potential issues.
• Monitor complaints information to check specifically for issues arising in relation to cancellation and amendments.

Renewals

• Establish a written process for handling renewals with defined service levels including the process involved in making the renewal recommendation, how long prior to renewal the invitation will be sent and taking into account the Contract Certainty Code of Practice.
• Measure actual practice against the firm’s service levels and written processes to monitor success and gather appropriate Management Information.
• Ensure that renewal information is in plain English with key issues such as any significant changes and new exclusions being given appropriate prominence.
• Highlight where any ‘extras’ such as legal cover or courtesy car hire, which may be included free in the first year, will be charged for.
• Contact customers in advance of renewal in order to establish whether there has been any change in circumstances.
• Automatically re-broking all policies each year to ensure the customer has the best deal.
• Ensure the renewal invitation clearly confirms the demands and needs on which the recommendation is based and prominently reminds the customer of the need to advise the firm where circumstances have changed.
• Remind customers about the importance of material facts.
• Where auto renewal is used ensure that this is made clear to the customer at the point when they purchase the policy, communicate clearly leading up the renewal date and provide customers with a clear way to opt-out of the auto renewal. Also consider appropriate touchpoints for contacting the customer to ensure that the cover provided continues to meet their needs.

Document CBC10 provides an example of renewal letters which firms may find useful.