Regulator identifies failings in governance over some mobile phone insurance products

The Financial Conduct Authority (FCA) has published a report on the results of a review into the mobile phone insurance market (16-page / 737KB PDF). The regulator undertook a review of nine insurers, administrators and sellers of mobile phone insurance after concerns were expressed by the Financial Ombudsman Service and consumer groups about the "design, sales processes, claims and administration of MPI products".

The regulator said that it found some examples where practices could be improved.

The FCA said that it had identified failings in governance where some providers had not considered why a "high proportion of certain types of claims" made by consumers were being rejected .

"We found that there is sometimes a mis-match between what consumers may need cover for and what the cover actually provides," it added. "For example, the majority of products in our review covered loss, but in practice did not cover instances where the customer accidentally left their phone unattended somewhere. From the files we looked at, customers expect to be covered for this type of loss."

The FCA said that the companies that participated in the review have "committed to reviewing and improving their product governance to ensure it is fit for purpose".

"This includes considering the root causes of why claims are being declined and where appropriate making changes to the product to ensure it meets consumers’ needs and delivers what they have been led to expect," it said.

Among other issues identified, the FCA said that it had found that the terms of mobile phone insurance contracts were not always clear and fair to consumers. It said it also found examples of poor sales practices and found some cases where claims were being handled slowly and unfairly and said some firms were not adhering to complaints handling rules.

"Mobile phones play an increasingly important role in consumers’ lives, with millions choosing to insure their devices," the FCA said. "We are committed to ensuring consumers are getting a fair deal in this market and tackling the issues we have identified."

The regulator said that it could look more closely into practices in the mobile phone insurance market if it discovers that its concerns are not addressed by providers.