By Carolyn Cohn
LONDON (Reuters) - General insurers are not considering the value for money of their products and services, Britain's financial watchdog said on Wednesday, warning it was prepared to take action against firms and their senior managers.
The Financial Conduct Authority has written to the CEOs of general insurers, which provide insurance for homes, cars, travel and pets, to say their manufacturing, sales and distribution approaches can lead to customers buying the wrong products, paying excessive prices or receiving poor service.
"We are going to carry out further supervisory work to make sure that firms meet their obligations and will not hesitate to use the full range of our regulatory powers," Jonathan Davidson, FCA executive director of supervision for retail and authorisations, said in a statement alongside the publication of a report on the general insurance distribution chain.
The FCA said it had found that buying general insurance could involve a chain of intermediaries which "can result in customers paying significantly higher prices than the production and delivery costs of the products they are buying".
There could be a high risk of "unsuitable sales", for instance when insurance was sold alongside a non-financial product like a car, washing machine or holiday, it added.
Customers were not always receiving good service, particularly when making claims or complaints, the FCA said.
The FCA said in the letter to CEOs that it expected them to take action where needed to improve their distribution processes, and it would carry out further supervisory work.
Companies offering general insurance include FTSE 100 firms Aviva (LON:AV), RSA, Admiral and Direct Line.