UK Regulator Finds Flaws in Mobile Phone Insurance Market

The UK's Financial Conduct Authority (FCA) has published a review focusing on the way mobile phone insurance firms design products and handle claims from customers that have lost or damaged their phone, or had it stolen.

The FCA says that it found some examples of poor practice in a number of areas: elements of the products were not designed to meet customers' needs, some terms and conditions were unclear and unfair, and there were examples of poor claims and complaints handling.

The FCA reviewed the practices of nine firms that have a majority share of the mobile phone insurance market.

It found that some firms were not always thinking through why high numbers of claims were being rejected, and therefore not feeding that back into their product design process. Also, while the majority of policies promised to cover loss, in practice they often did not cover instances where the customer accidentally leaves their phone somewhere.

The review also contains real-life examples of firms not treating their customers fairly. In one case, a claim was declined because the customer knew where they'd accidentally left their phone; while in another a claimant was rejected because she left her phone in a hotel room, which was deemed to be a public place as soon as she checked out and therefore was excluded from cover.

The FCA has presented the findings to the firms that took part in the review, who are now making changes to their processes.

In addition, in July the FCA said that it will impose a significant fine on an unnamed firm in this market for poor handling of complaints.

Clive Adamson, the FCA's director of supervision, commented: "What this review shows is that sometimes there is a gap between what the customer thinks they are getting, and what they are really getting. Closing this gap will lead to greater trust and confidence."