ID theft insurance firms under FSA scrutinyWhich? welcomes regulator's investigation
29 March 2011
The ID theft insurance sector is being investigated by the Financial Services Authority. As a result of the regulator's scrutiny, market leader CPP has suspended all new sales of their ID theft insurance, and issued a profits warning.
Which? welcomes the FSA's investigation. We have long campaigned in this area as we believe many customers have been mis-sold ID theft policies.
Potential ID theft mis-selling
We've heard of a number of practices used to secure a sale. Claims made by consumers sold ID fraud insurance by various companies include:
- over-stating how easy it is to have your personal ID stolen
- telling people that they will be liable for losses
- neglecting to mention that customers would need internet access to access some of the policies features
The chances of falling foul of ID theft are very small. According to Which? research, just 3% of the 18% of consumers with this product have needed to make a claim. Customers have told us that they have been 'overwhelmed' by the sales pitch, and called the approach 'aggressive' and 'scaremongering'.
A useless financial product
Which? chief executive, Peter Vicary-Smith, says: 'ID theft insurance is a product that most people will never use yet hundreds of thousands of policies have been sold, which raises serious questions about the sales practices being employed.
'We wrote to the FSA last year asking it to investigate ID theft insurance sales after several of our members contacted us with concerns about how it was sold to them, so it’s good to see action being taken.'
Consumers who think they have been mis-sold to can complain to their provider, cancel their policy and ask for a refund. If the complaint is refused, or the matter is not resolved to the customer's satisfaction within eight weeks, the matter can be referred to the Financial Ombudsman Service.
Visit the Which? ID theft insurance campaign guide for more information on how to spot if you have been mis-sold this cover and how to make a claim.
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