FSA market study into insurance add-ons 'shines a light' on competition
The FSA has recently announced details of a market study into general insurance add-on products in a bid to 'shine a light' on how competition operates within the 'relevant markets' for such products.
This follows the October 2012 FSA publication 'Journey to the FCA', which firmly embedded competition in the FCA's new regulatory approach.
The Competition Commission (CC) is also currently looking at add-ons as part of its 'Statement of Issues' in the private motor insurance (PMI) market investigation.
As the FSA will specifically focus on add-ons sold with larger purchases, such as cars, it is to be hoped that the FSA and CC processes will be joined up to ensure they deliver a consistent outcome.
It is anticipated that the FSA's findings will provide a basis for the FCA to decide whether or not it needs to intervene to ensure that competition in the markets for add-on sales of general insurance benefits consumers. The FSA intends to complete its assessment by the third quarter of 2013 and its results will be published shortly afterwards.
If the FCA does consider there to be insufficient competition in any market, it may choose to ban certain insurance products or publish details of any misleading financial promotions using the powers given to it under the new financial services legislation.
In light of the FCA's powers in this respect, there would seem to be unnecessary duplication involved in any CC investigation into PMI add-ons that proves more than simply cursory.