insurance regulation, dispute- resolution and compensation in the united kingdom david thomas...
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Insurance regulation, dispute-resolution and compensationin the United Kingdom
David Thomascorporate director and principal ombudsman
Financial Ombudsman Service
Insurance in the UK Total yearly premiums of
33 billion GBP / 38 billion EUR /52 billion USD / 77,000 billion UZS
UK provides 11% of worldwide insurance. Second only to USA (30%) whose population = UK x 5
Financial services (including insurance) depend on consumer trust and confidence
Trust and confidence requires regulation of financial providers,
to be financially sound and behave well resolution of claims by consumers,
if things go wrong compensation for consumers if the
financial provider becomes insolvent
3 bodies established by law Financial Services Authority (FSA) Financial Ombudsman Service (FOS) Financial Services Compensation Scheme (FSCS)
Financial Services Authority (FSA)regulates insurers and insurance advisers investment/pension providers and advisers banks and electronic money providers mortgage lenders and advisers stockbrokers
regulation of financial providers
FSA makes and polices the rules supervises financial services providers prudential regulation conduct-of-business regulation
www.fsa.gov.uk
regulation of financial providers
European Union (EU)
regulation of financial providers
EU standards and regulatory passportA financial provider regulated in one EU state can: provide services cross-border from its home state
to consumers in other EU states open branches in other EU states after registering
(by right) with the local regulator.
regulation of financial providers
Financial Ombudsman Service (FOS)resolves disputes between consumers and financial providers not a regulator an alternative to the civil courts informal / quicker / cheaper free to consumers also encourages complaint resolution/prevention
resolution of claims by consumers
FOS covers UK branches of financial
providers, whether UK or foreign owned takes complaints from individuals and
small businesses, worldwide
resolution of claims by consumers
www.financial-ombudsman.org.uk
Consumers must complain to the financial provider first
Financial providers must respond to both oral/written complaints deal with them promptly give written final response within 8 weeks tell the consumer about FOS
resolution of claims by consumers
totalenquiries 789,877
written enquiries 389,959
Figures for year to 31 March 2009UK population = Uzbekistan x 2.2
FOS workload
fullcases127,471
mediateorrecommend
ombudsmandecisions10,198
resolution of claims by consumers
phone enquiries399,918
Breakdown of FOS cases
banking and credit 43%
insurance 39%
investment 18%
resolution of claims by consumers
We decide what is fair in the circumstances of each case
taking into account law FSA rules good industry practice
We can award compensation up to
100,000 GBP / 114,000 EUR / 160/000 USD / 230,000,000 UZS
resolution of claims by consumers
European Union (EU)
resolution of claims by consumers
European network of financial redress bodies cooperate on cross-border claims meet six-monthly
www.fin-net.euwww.fin-net.eu
resolution of claims by consumers
1998 European principles forout-of-court redress bodiesStandards for – transparency due process independence legality effectiveness
resolution of claims by consumers
Other insurance or financial services ombudsmen outside Europe include Armenia Australia Chile Kazakhstan
New Zealand South Africa Trinidad and Tobago
resolution of claims by consumers
Financial Services Compensation Scheme (FSCS)covers consumer claims if a financial provider becomes insolvent Separate compensation funds for each
sector (for example, insurance) Insurance fund paid for by contributions
from all insurers
compensation for consumers
FSCS will pay Compulsory insurance
(to cover claim by third party)100% of claim, no limit to amount
Voluntary insurance(to cover claim by customer)90% of claim, no limit to amount
www.fscs.org.uk
compensation for consumers
FSA bills each insurer yearlyfor its share (based of premium income) of
the cost of FSA 25% of the cost of FOS the cost of FSCS
paying for the system
The other 75% of the cost of FOScomes from case fees payable by the insurer
Its first 3 cases a year are free
Each extra case costs 500 GBP / 570 EUR / 800 USD / 1,163,000 UZS *
* About the weekly pay of a bus driver or secretary
paying for the system
Further informationFSA: www.fsa.gov.uk
FOS: www.financial-ombudsman.org.uk
FSCS: www.fscs.org.uk
E-mail: [email protected]
Insurance regulation, dispute-resolution and compensationin the United Kingdom
David Thomascorporate director and principal ombudsman
Financial Ombudsman Service