The FCA recently re-visited the Mobile Phone Insurance market to assess whether firms had implemented their recommendations from the 2013 thematic review. Whilst the firms who had participated in the 2013 review had implemented recommendations the majority of the rest had made no improvement in delivering better customer outcomes.
Mobile Phone Insurance is an increasingly popular product taken out by millions of mobile phone users who want to protect an item that is expensive to replace and central to modern life. Whilst premiums are low it is a very large market and there is a massive variance of standards. The best providers are handling claims as quickly as 4 days whereas others are taking nearly five times as long. The best are paying 91% of claims whereas the worst are paying only 54% and not even completing 39% of cases.
The 2013 MPI thematic review identified some major gaps in the way providers were operating. A lack of governance over product development and in sales processes was resulting in products that were either poorly designed or poorly sold, sometimes both, and therefore not effectively meeting customer needs. Claims handling processes were often found to be slow and often resulting in unfair outcomes, and complaints handling rules were often not adhered to.
The FCA have again urged MPI firms to review their recommendations and implement changes. It is likely that firms who do not take note on this second occasion will come under regulatory action possibly even being subject to enforcement. As a result there could be consolidation in the market as smaller firms who are less able to meet requirements may face the prospect of having to sell their back books to competitors.