14 December 2012

FSA: Packaged bank accounts

This Policy Statement reports on the main issues arising from Consultation Paper 12/17, 'Packaged bank accounts – New ICOBS rules for the sale of non-investment insurance contracts' (July 2012), and publishes final rules.

In October 2011, the FSA consulted on its proposals for new eligibility and suitability rules for the sale of insurance as part of a packaged bank account. This was to ensure that consumers are able to make an informed decision about the insurance policies in the package and to limit the potential risk that they rely on one or more of the policies, only to find out later that they are unexpectedly unable to claim because they are ineligible or the policy was not suitable for their needs.

The FSA published feedback to these proposals and the final rules in July 2012. It also consulted on further proposals to address feedback on the content and distribution of the new annual eligibility statement (AES), and premium disclosure for insurance provided in this way. The proposals were to:

• specify the requirements for the content and distribution of the annual eligibility statement (AES) with effect from 31 March 2013; and
• switch off its ICOBS rule on separate premium disclosure, with effect from 1 January 2013, for packaged bank accounts.

This Policy Statement provides feedback on the responses received to these proposals and publishes the final Insurance Conduct of Business sourcebook (ICOBS) rules.

Respondents agreed with the FSA’s proposal that the AES should be a separate document provided to the customer in a separate mailing to avoid possible confusion with marketing information. Firms said this should not prevent them combining the AES with the annual charges summary they already send to their customers, and requested that the FSA amend the draft rule to allow this. For the reasons the FSA explains in Chapter 2, it does not think that this would achieve the right outcome for consumers.

The proposed requirement for the statement to be personalised to notify customers when any person entitled to claim benefits under the travel policy triggers the age limit also received support, but firms asked the regulator to modify the draft rule so that it only applied to the account holder(s) (as this is the only reliable age information they hold).

In Chapter 2, the FSA confirms that with effect from 31 March 2013 it will implement the requirements consulted on in CP12/17 with two amendments. A minor amendment to clarify the FSA’s intention that the AES must be provided ‘in writing’. This would include distribution by email. The second amendment is made to clarify who the requirement to personalise the AES applies to. The regulator has amended it to apply to the ‘customer’, which in the case of a packaged bank account will be the account holder(s).

Press release

Full Policy Statement

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