FCA changes approved this month 1 August 2022 at 4:17PM in Insurance & life assurance 10 replies 121 views

MrFrugalFever

I have read the MSE news on the FCA proposal and changes approved this month - see link below;

https://www.moneysavingexpert.com/news/2022/07/-fca-confirms-new-consumer-duty---financial-firms-will-have-12-m/

This is a great move and I truly hope helps to reduce or even see an end to the ridiculous ‘admin’, ‘adjustment’ and ‘cancellation’ fees these crooks charge.

dunstonh

This is a great move and I truly hope helps to reduce or even see an end to the ridiculous ‘admin’, ‘adjustment’ and ‘cancellation’ fees these crooks charge.

Why do you think it will end those when they are a fairer way compared to everyone paying more in premiums to cover the minority that create work?

MrFrugalFever

I have yet to get a full itemised breakdown from anybody within the insurance sector of how a £25-35 admin charge is calculated when a change to a policy can be made online within minutes (seconds at the click of the final button) and documents changed, updated and readily available within minutes. The mind boggles.

dunstonh

I have yet to get a full itemised breakdown from anybody within the insurance sector of how a £25-35 admin charge is calculated 

And what makes you think they are required to give you that itemised breakdown?  It is actually quite a bizarre request as well because any charge like that is averaged.  It will include someone that is on the phone for 10 minutes sorting an issue and another that takes 45 minutes to sort it.      

 when a change to a policy can be made online within minutes (seconds at the click of the final button) and documents changed, updated and readily available within minutes. The mind boggles.

And how much did all that IT cost to put that functionality in place? or the staff that maintain it and the computers operating in cooled rooms burning electricity, or the actuaries that have to calculate it all or the regulatory staff and so on.

It's funny how people think that no costs exist when a button can be pressed.   It is certainly cheaper than manual, which is why some providers will discount or even eliminate the administration cost but others that don't have that cost typically increase their premium to cover the cost of administration.   

The FCA generally has a preference for explicit charging rather than cross-subsidy and most people are better off with explicit fees.

MrFrugalFever

All of that should be calculated in the cost of the goods.

You don’t go and buy a tin of baked beans in Tesco for 55p to then find out when you get to the cashier that an additional 10p is chargeable because they’ve had to handle the product, tap a few keys on the keyboard, ask you for payment and provide you with a receipt, all of which costs tesco money.

dunstonh

You don’t go and buy a tin of baked beans in Tesco for 55p to then find out when you get to the cashier that an additional 10p is chargeable because they’ve had to handle the product, tap a few keys on the keyboard, ask you for payment and provide you with a receipt, all of which costs tesco money.

Not at all comparable as a tin of bins is a single-use item.  Insurance is for a period where circumstances can change.

MrFrugalFever

Ok let’s bring it back in to an MSE scenario. You take out a credit card, you spend a little on it, you pay it back in full each month. You decide it is no longer benefitting you (for whatever reason) but when you go to cancel, they want to charge you £25 for the privilege. You wouldn’t be too happy with that (or maybe you would?).

it appears that we are both going to agree to disagree here but ultimately my stance on the matter stands very firmly with ‘unfair charges’.

dunstonh

You decide it is no longer benefitting you (for whatever reason) but when you go to cancel, they want to charge you £25 for the privilege. You wouldn’t be too happy with that (or maybe you would?).

Not comparable as you haven't bought a credit card for a fixed term.  Its effectively pay as you go.  

it appears that we are both going to agree to disagree here but ultimately my stance on the matter stands very firmly with ‘unfair charges’.

Indeed.  I just don't see why you think that everyone paying around £10 more is better than those creating the work paying £25.  Your way is unfair to the majority that does not create extra work.

Weighty1

MrFrugalFever said:

Ok let’s bring it back in to an MSE scenario. You take out a credit card, you spend a little on it, you pay it back in full each month. You decide it is no longer benefitting you (for whatever reason) but when you go to cancel, they want to charge you £25 for the privilege. You wouldn’t be too happy with that (or maybe you would?).

it appears that we are both going to agree to disagree here but ultimately my stance on the matter stands very firmly with ‘unfair charges’.

It doesn't really matter what your stance is.

Dunstonh is totally right with his explanations and you are wrong.  The analogy of buyinng a tin of beans should be changed that you initially buy a tin of beans but when you get to the checkout you realise you want beans with sausages yet you take umbrage at having to pay a different price.  YOU've changed the deal, YOU pay for those changes.

MrFrugalFever

Weighty1 said:

MrFrugalFever said:

Ok let’s bring it back in to an MSE scenario. You take out a credit card, you spend a little on it, you pay it back in full each month. You decide it is no longer benefitting you (for whatever reason) but when you go to cancel, they want to charge you £25 for the privilege. You wouldn’t be too happy with that (or maybe you would?).

it appears that we are both going to agree to disagree here but ultimately my stance on the matter stands very firmly with ‘unfair charges’.

It doesn't really matter what your stance is.

Dunstonh is totally right with his explanations and you are wrong.  The analogy of buyinng a tin of beans should be changed that you initially buy a tin of beans but when you get to the checkout you realise you want beans with sausages yet you take umbrage at having to pay a different price.  YOU've changed the deal, YOU pay for those changes.

Yes and if I change the deal, say move address, I expect a risk related change in a premium and either an increase (or decrease) accordingly, I don’t then expect to pay extra on top for a computer to do the work.

I imagine that you are all for paying service charges in restaurants too?

dunstonh

Yes and if I change the deal, say move address, I expect a risk related change in a premium and either an increase (or decrease) accordingly, I don’t then expect to pay extra on top for a computer to do the work.

The simple answer is for you not to buy insurance from a provider where they have explicit charging and instead pick a provider that increases the premium to cover their costs.  It will probably cost you more in the long term but that is exactly what you are looking for.

We have that choice and choice is a good thing.   You can pick provider that suit your preferred model and others can pick providers that suit theirs.

I imagine that you are all for paying service charges in restaurants too?

Tips are commonplace because the cost of the meal doesn't factor in cost of service beyond the basic.    However, again, its not comparable as a meal is a single event and not an annual contract.