A chance for all bankrupts to change your life - Your help needed!

4$£&*(£$&*(!

I'm told today the work sits with another person within the ABI so I have sent a brief summary of where things stand with my work and what I am looking to achieve, along with the original report I submitted to the ABI last year.

I've also tweeted @huwevans71 (ABI blogging) and @BritishInsurers to keep this in the open, if you have an interest and are on twitter you might want to follow both of them and share your support for this. I tweeted last night and also just now if you want to tag onto my tweets.

4$£&*(£$&*(!

Here is the latest position from the ABI:

[FONT=&quot]Thank you for your email below. I have now had a chance to consult members on this issue. The ABI has also been discussing the implications of the Consumer Insurance (Disclosure and Representations) Act 2012 with members, price comparison websites and the Financial Ombudsman Service. In particular, members and comparison sites have been looking at the questions sets that they ask customers at the proposal stage.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Responses from members to the questions you have raised indicate that:[/FONT]
· [FONT=&quot]Some large direct insurers don’t ask any questions about bankruptcy at all[/FONT]
· [FONT=&quot]Some insurers may vary their approach depending on different “brands” or “products” they offer or which sales channel the policy is sold through (direct, comparison site, broker etc)[/FONT]
· [FONT=&quot]Some insurers do put a time limit on their questions about bankruptcy, so they would ask, for example, whether the bankruptcy has occurred in the last three years [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]So different insurers have different approaches to this issue, but this variety of approaches to assessing risk is what drives a competitive home insurance market.

[/FONT]
[FONT=&quot]In the discussions referred to above, regarding the Consumer Insurance Act, the issue of bankruptcy was discussed and a consensus among insurers and comparison sites favoured asking questions along the following lines on comparison sites:[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]- [/FONT][FONT=&quot]Have you or anyone living with you ever been made bankrupt?[/FONT]
[FONT=&quot]- [/FONT][FONT=&quot]Has the bankruptcy been discharged?[/FONT]
[FONT=&quot]- [/FONT][FONT=&quot]Have you or anyone living with you been served with any county court judgements (CCJs) or other judgements in relation to debt?[/FONT]
[FONT=&quot]- [/FONT][FONT=&quot]Has the judgement been paid?[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Although many insurers are sympathetic to your suggestion that a time limit should be included in the question on bankruptcy[/FONT][FONT=&quot],[/FONT][FONT=&quot] the issue that we face is that the[/FONT][FONT=&quot] [/FONT][FONT=&quot]comparison sites questions have to be as broad as possible to cater for everyone in the market. It is important to stress that the comparison sites must take into account what the insurers that operate through them consider to be important. It is clear that some insurers do consider this information to be material to the risk. It is their prerogative to decide which questions that they consider to be important in assessing whether they want to offer a quote and the premium, terms and conditions they want to offer[/FONT][FONT=&quot]. [/FONT][FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]However, it is also clear that, for bankrupts and their partners, the insurance market is accessible. Some very large and highly competitive insurers do not ask questions about it and are apparently happy to accept customers that have been bankrupt. So our advice would be for those in this position to shop around to get the best possible quote. Shopping around does not just involve using comparison sites, which are primarily aimed at straight-forward risks, but also phoning up insurers and brokers and seeking quotes from direct insurers’ websites. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I hope this explains the position.[/FONT]



Here is my reply:

Thank you for the update on your position. This is admittedly somewhat disappointing as competitive insurance may be denied to bankrupts looking for cover from a broad range of brands, and there appears to be both a desire and a positive impact on insurers looking to secure a uniform approach to this matter coupled with the fact that online comparison sites is the fastest growing area for policy inception.

To demonstrate an example taken today, using Confused.com I obtained a quote declaring bankruptcy of another person in the household for £537. Only one quote was returned. Using exactly the same data but advising no-one in the household has ever been bankrupt I was able to obtain quotes from £239 and over 72 quotes were returned - many who have advised me on former occasions they did not consider bankruptcy to be an issue yet refused to quote in this scenario.

I am keen to continue pursuing this matter until a resolution is reached. With this in mind, what steps would you envisage taking to halt unfair quotes being returned in the scenario I have described here? Equally, I am eager to understand why you appear to be advocating a perpetual question of bankruptcy which may have little to no bearing on the risk many years after its occurrence.

4$£&*(£$&*(!

I am really angry that the ABI's response, in my interpretation, seems to simply justify their position and does nothing to practically address my concerns. I'm now about to write to the Law Commission to see how a consultation could be proposed into reviewing how bankruptcy data is used, ideally with a view to force insurers to ignore bankruptcy in the same way they are obliged to ignore spent criminal convictions.

Bankrupts are not criminals, so why do some companies feel it appropriate to treat them WORSE than criminals?!

4$£&*(£$&*(!

It has been quite some time since I put any significant work into this area, but a few weeks ago Martin put out a tweet the FCA was forming and we can feed our views into it. Needless to say I did just that!

Here's their reply which I've interpreted as positive, I will be asking to form part of their consultation:


Firstly, I would like to advise that bankruptcy is a civil and not criminal offence, and whilst a person may be discharged from bankruptcy after 12 months, it will remain on their credit record for 6 years.

As we understand it, bankruptcy is not covered under the Rehabilitation of Offenders Act (1974), or similar legislation. Insurers cannot take convictions which are 'spent' under the terms of that Act into consideration as part of their risk based pricing.

Historically, the Financial Services Authority (FSA) has not carried out any sector-wide monitoring of how insurers differentiate their prices between customers. Insurers set premiums based on their assessment of risk, and different insurers will take different factors into account. Some insurers may include bankruptcy history in their assessment of risk. In the past, our view has been that the decision to provide cover (or not), and at what price, is a commercial decision for an insurer, and that it would not be appropriate for the regulator to require a company or the insurance sector to provide cover for certain risks.

However, the Financial Conduct Authority (FCA) has new objectives and duties, which include a requirement for it to 'have regard' of access to financial products. This means we will look at issues like premium charging in a new light.

We are already discussing the issue of premium charging with insurance firms, the Association of British Insurers (ABI) and consumer representatives. We will decide what, if any, action needs to be taken once we gather the information necessary. Our supervisors are also currently running thematic work on certain practices in a number of firms' motor and home insurance policies.

We would also observe that some insurers do have different appetites for risk, and that all consumers may benefit from shopping around for quotes from different insurance companies. The British Insurance Brokers' Association (BIBA) can be particularly helpful in cases where there are issues around the availability or price of insurance cover. BIBA can be contacted at:

14 Bevis Marks
London
EC3A 7NT

and their consumer helpline is: 0870 950 1790.

An independent charity, Unlock, seeks to achieve equality for people with previous convictions, including bankruptcy. They can provide a list of insurers who will cover people with previous convictions. Their website is:

https://www.unlock.org.uk

and their telephone number is: 01634 247350.

And finally, the organisation responsible for insolvency policy matters in the UK, the Insolvency Service, may be able to provide more information on this issue. They can be contacted at:

The Insolvency Service
Policy Unit
3rd Floor Zone B
21 Bloomsbury Street
London
WC1B 3QW.

4$£&*(£$&*(!

Here's my reply to the FCA tonight, as they said in their email to me (last post) they are in talks with a number of people about insurance premiums I am really keen on getting this issue fed into their conclusions:

I am very grateful of your detailed reply and fully appreciate what I am asking is a reasonably technical question on a matter that affects a minority of people. My main frustration is the industry appears to be static in moving on this issue despite there being signs of interest within the industry there is an appetite for change. It is particularly interesting the Information Commissioner confirms such collection of data may be counter-intuitive to the third principle of the Data Protection Act but can only act on specific business complaints rather than address an entire industry. It is also further noteworthy the industry body, the ABI, has been deliberating on evidence I submitted on this issue in 2011 and at the end of last year reached the conclusion whilst they are sympathetic to my argument they do not feel time limiting this area to be appropriate and it is within the prerogative of the individual company what risk basis they choose to take.

I am attaching two documents for your consideration. The first, a PDF file highlighting my concerns to the Insolvency Relief Committee last year, outlines a summary of the position as I see it and continues to list some initial work I conducted in this area during summer 2011 (this work has been submitted to the ABI). The second RTF file is the ABI's final position having consulted their membership. I am naturally at a conflict with their outlined findings and feel their approach is almost lackadaisical.

You may find it useful as a very unscientific straw poll to use a couple of the price comparison websites such as GoCompare and Confused.com, placing like for like data but observing the price differentials when bankruptcy is declared. The difference in my experience can be sigificant, in some cases almost treble the price. The change I am seeking to be implemented is not huge but to me is one of fairness in principle. Should an insurer be concerned a bankruptcy happened within the last year? My feeling is they have a legitimate right to know what risk that person may pose. Within six years also, as you have highlighted, credit checks will raise the issue. Is bankruptcy so relevant beyond six years? 10, 20 or more years - I would argue there is practically no bearing on a person's insurance risk for a significantly aged bankruptcy. Given some aggregation websites ask when a bankruptcy took place yet still arrive with hugely inflated prices, in my tests the length of time appears irrelevant when the quotes are returned, I feel it is appropriate for this scenario to be time limited. I would be in great favour of statute barring any requirement to declare bankruptcy older than six years which will allow fairer competition in the market, more appropriate use of historical data whilst protecting insurers against their perceived risks.

As you are already undertaking work on premium charging I would be delighted to have formal input in this. You may gather I have put in a lot of work into this field for a considerable amount of time and I am eager to share my views with you. I hope you find my input to date useful and relevant and I look forward to hearing from you in due course.

MistaSooperAngry

Oops! I went to unlock.org but got a virus warning from Avast!

Infection Details

URL:http://www.unlock.org.uk/favicon.ico Process:C:\Program Files\Mozilla Firefox\firefox... Infection:PHP:Agent-OH [Trj]
In my 3rd year since discharge and staying far outside the fiscal system. Maybe bitcoin next

Well done CS, let's hope this new body has more teeth and less appetite for lunches with the folk it regulates than the last.

4$£&*(£$&*(!

Thanks, I am absolutely serious about providing proper, substantiated feedback to the FCA about this unfairness and happy to make formal representation to them. The ABI has brushed me off, too many companies do not think this is an important issue, I aim to demonstrate to the FCA they need to be championing this issue and, as a brand new regulator, it's important they show their teeth early on to allow the public to have confidence in them.

Let's hope this area is one of the first they do show their teeth in now I have sent them initial evidence of a problem. I would encourage others to contact them to highlight personal experiences of this issue too.

alastairq

Thanks for all your effort, CitySlicker.....I feel somewhat guilty that one person is doing what we all want to do, but most of us lack the capability..one way or another?

4$£&*(£$&*(!

Sometimes it only takes one person to stand up and say this is wrong. I've tried so many groups and had the door closed by all of them - from individual insurers who are sympathetic but powerless to change the industry, to MPs who wish me well, to consumer groups and prominent money campaigners who all link me to other sources of help but fail to address the issue.

In truth I thought this was all finalised when the ABI came back with their response at the end of last year telling me the status quo applies. It was the starting of the FCA that got me thinking I need to revisit this issue and let's see what teeth the FCA has.

The really interesting thing for me, and what gives me new hope, is what objectives the FCA has. Since the setting up of the FSA we had PPI mis-selling, the banking crisis, all the financial scandals that were allowed to go on. I am not suggesting for a second the FSA was mismanaged or ineffective in its core objectives, but I am suggesting they did not always have the consumer's best interests at heart. The new FCA has a page with details of their board members here http://www.fca.org.uk/news/press-releases/financial-conduct-authority-board-members-confirmed and if you scroll down to the bottom the fourth point under notes for editors tells us a bit more about the FCA's objectives. As you can see - much, much more different than the former FSA.

There appears to be far less industry links with this new body. Particularly bearing in mind the recent select committee on tax in parliament draws attention that some organisations seconded workers to HMRC who then returned home to their own businesses and drew up loopholes from the insider info they gleaned, it's likely to be high on the agenda of government this new FCA body is seen to be completely impartial to business lobbying. (If there's a sniff of this going on I think all it will need is a quick freedom of info request to see who is dining out with who and get it into the open fast - I should imagine the FCA will not want to be seen to be too friendly with anyone).

I think this is possibly the dawn of a new era of regulation in the UK and I'm interested to see how this one goes.

fiveyearplan

City Slicker - thank you for all the time and effort you put into this. It is really appreciated, I do hope something positive comes out of all your work!