Following the publication of PS15/22 on general insurance add-ons in September 2015, the FCA has recently published a number of case studies to help firms understand its expectations under the new rules and guidance.
PS15/22 set out three initiatives taken by the FCA in order to address the problem of opt-in selling as follows:
- A ban on selling “optional additional products” on an opt-out basis. (Additional rules inserted into various chapters of the FCA Handbook, including ICOBS). This occurs when firms use sales methods such as pre-ticked boxes. The definition of an optional additional product, which includes both separate policies and optional extras, applies only to the ban on opt-out selling and should not be read across to other parts of the Handbook.
- Handbook Guidance (ICOBS 6.1.6AG). This clarifies that the existing product information provision rule (ICOBS 6.1.5R) applies to any policy, regardless of whether it is sold on its own or with another policy, or other goods or services.
- Non-Handbook guidance (set out in policy statement PS15/22). Suggesting ways that firms can support customers’ informed decision making, in light of the findings of the market study. The non-Handbook guidance applies to policies and optional extras.
The case studies illustrate the different “customer journeys” and provide examples of where firms may be at risk of acting contrary to the FCA rules and guidance on the opt-in sale of add-on products.