New regulations proposed to favour the consumer
by Luke Whitmore, 25th May 2011
The government is planning an update to insurance disclosure
laws, after the PPI scandal which saw millions of consumers
complain to the banks over being sold expensive, useless and
unwanted loan insurance policies.
The Consumer Insurance Bill, slated as a replacement for the
current Consumer Insurance (Disclosure and Representations) Bill
which dates back to 1906, is intended to ensure that both parties
are in possession of all the facts before an insurance policy is
agreed upon, and places responsibility on the insurer to provide
customers with suitable policies.
Insurers will be required to clearly state all the relevant
questions, putting an end to brokers being able to push unsuitable
policies onto people by operating on assumptions, making misleading
enquiries or confusing their customers with jargon or hidden terms
and conditions. The current law, which was weighted against
consumers and allowed insurance brokers to get away with such
unsavoury practices, permitted the banks to burden millions of
borrowers with worthless Payment Protection Insurance (PPI)
policies.
The responsibility of the person who is taking out the policy
will simply be to answer all the questions honestly and not omit
any information requested, even if they think it is unimportant.
The new laws state that if the customers comply with this, then
they should be covered by the insurance - rather than allowing
small print or loopholes to cheat them out of a payout.
This means that an insurer who neglects to ask all the relevant
questions will have to cover the loss, rather than being able to
deny a claim to a customer. It is hoped that this will put an end
to such systemic mis-selling as the PPI scandal, which has left the
banks facing a bill for billions of pounds after a court decision
determined that they were responsible for compensating wronged
consumers.
If you were hit by the PPI mis-selling scandal, we can help you
claim a PPI
refund.
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