New rules to force insurers to end the practice of simply rolling over your cover, and automatically charging you for another year, come into force next week. They are part of a raft of new consumer protection measures that are being put in place by the Central Bank.
As of now, companies providing insurance for travel, gadgets, dental care and pets can simply extend cover year to year unless consumers actively opt out at renewal.
Auto-renewal means people can end up with cover they no longer require, or it can deprive them of the chance to shop around for better terms.
However, health, home and car insurance are not included in the changes because consumers could be left exposed without cover in certain areas.
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Possibly even more important for older consumers, or those who are ill or experience language difficulties, will be a measure that allows them to nominate a trusted contact person.
Financial services firms will be required to facilitate such requests. This person will be a contact point either where there may be difficulty in dealing with a customer, or where financial abuse, including fraud, is suspected, though they will not have any authority to interfere in the person’s financial affairs directly.
It is an approach that has already been piloted with success in the United States and Canada, the Central Bank says, and attracted significant support in an early discussion paper on enhanced consumer protection.
“Customers in vulnerable circumstances should never be disadvantaged or experience less favourable outcomes when it comes to their finances,” said Michael Kavanagh, chief executive of the Compliance Institute. “But the finding of a poll of our members suggest that they may well be.
“Sadly cases of financial abuse and fraud have been on the rise in recent years so anything which might help combat it is welcome.”
Almost twice as many institute members cited the trusted contact measure as the most important among the suite of new protections coming into force next Tuesday. However, they concede it will be the most challenging of the reforms to implement.
Among other measures, financial services firms will be obliged to ensure their advertising does not mislead customers when it comes to the “green credentials” of the product or the firm itself.
Lenders will also be obliged to find and return title deeds for borrowers within 10 working days of a request, after mortgage switchers complained of unnecessary delays by some lenders.
All told, the main message of the updated consumer protection code is that the financial services sector must do more to place customers at the heart of its business, not the convenience of the firms.
