Insurance firms warned over cold callingThey're told to stop pressurising customers
25 April 2007
Insurance firms have been warned to improve their standards when it comes to cold calling and to stop pressurising customers into making rushed decisions.
It comes after the Financial Services Authority (FSA) looked at 43 firms to see whether they were treating customers fairly when selling general insurance over the telephone.
The financial services watchdog found that when customers called firms the standard of sales was ‘generally acceptable’.
But standards were poor when insurance policies, such as personal accident insurance, health cash plans and accident and sickness insurance, were sold through cold calling.
Vernon Everitt, Director of Retail Themes at the FSA, said: ‘The quality of cold calling in general insurance sales was disappointing – consumers were pressurised and the benefits of the product were sometimes exaggerated.
‘We expect to see significant improvements when consumers are cold called. Swift action has been taken to deliver those improvements at the firms we visited and we are following up with other firms which use cold calling as part of their sales strategy.’
The FSA said action taken against firms included the voluntary suspension of sales until deficiencies had been rectified.
Vernon Everitt added: ‘The bottom line is that firms must never pressurise consumers into making a rushed decision and must always clearly spell out the nature and limitations of the products.
‘Our advice to consumers is this: if you are cold called, do not feel pressured into making a rushed decision, even where 'free periods' or other incentives are on offer. Step back and take all the time you need to make sure the insurance is right for you.’
The FSA added that it will now expand its review to take in firms not included in the original study.