The FCA has announced that it will extend the implementation period of new insurance pricing rules, which it is set to unveil at the end of May, having previously proposed that firms would have only four months to implement any rules announced at that time.
Following the revised timetable, ther regulator will now give firms until the end of September 2021 for the systems and controls rules and the product governance rules and until the end of 2021 for the pricing, auto-renewal and reporting requirements.
The extension comes after the group received over 100 responses to a consultation on the new pricing, which closed on 25 January 2021, with almost all firms saying that it would not be possible for them to meet the proposed implementation timetable.
Firms reportedly told the FCA that the package of remedies on which it consulted would require “significant” operational and business-wide changes, which include developing and testing new pricing models and re-coding IT systems.
The respondents warned that these changes cannot be delivered in a short period, particularly as firms are working under “significant pressure” dealing with the impacts of the coronavirus pandemic.
While the FCA has not yet reached a final decision on the details of any insurance pricing rules it might introduce, it said it is making this announcement now so firms can “plan their change programmes effectively”.
In a statement, the FCA said: “We expect firms to implement any rules that we introduce on or before the proposed deadlines. We will check they are on track and are moving promptly to implement any final rules. To that end, we will closely monitor how firms implement their change programmes and will be checking their progress regularly.
“We do not want to see consumer harm continue into 2022 and have a range of tools and powers available to us. We will consider taking action against firms where there is evidence that they have not taken sufficient steps to implement the rules by the implementation date, including action to ensure they take appropriate steps to repair any harm that arises, especially financial loss to consumers.”
It added: “The pricing rules would apply to renewal notices sent after the rules take effect (rather than to policies renewing after the rules take effect). As renewal notices are sent some time before policies renew, this means firms have the full implementation period to make the necessary changes to their business models.”