The ABI has defended its stance on ‘wet signatures' for online and over-the-phone protection insurance following criticism it avoided the issue in yesterday's guidance paper.
The Association says it suggests flexibility for firms rather than laying down firm guidelines because that is what the majority of respondents to its consultation on the paper wanted.
In addition, the ABI says it is in the process of drawing up a separate document on wet signatures which it hopes to publish next year.
Yesterday the ABI published guidance for providers, entitled ‘Improving clarity of telephone and online applications for protection insurance’, in the wake of increased online and telephone applications for protection insurance.
Protection specialists Progress from Royal Liver criticised the paper for “not making a call” on the issue of wet signatures.
But an ABI spokesman hits back: “The ABI guidance does address the issue of wet signatures, in paragraph 4.6, in which we state: ‘It is up to each firm to consider having a standard approach to the issue of confirmation schedules, whether (and when) these need to be signed or not, and what controls are required.’
“Our guidance refers to both telephone and online applications, which use different processes, and the general view of those who responded to the consultation was that there needed to be flexibility for companies to decide themselves how to deal with confirmation schedules.”
The ABI also answers criticisms concerning qualifications for tele-underwriters, arguing the FSA “already has” requirements for this and that “it would have been pointless” to repeat them in its paper.
Andy Milburn, IFA market manager at Progress from Royal Liver, yesterday accused the ABI of failing to address the issue of wet signatures.
“The ABI has not made a call on this to decide when the wet signature is given, if at all,” he said. “I can’t believe they have gone down that route. It’s not best practice.
“You would be amazed how many times the customer comes back saying: ‘you have missed this’ or ‘I said that and you didn’t put it in’.
“Sadly we knew this would happen. How is that going to help us reduce the issue of non-disclosure in the industry?”
The paper outlines, among other things, how over-the-phone questions may need to be termed differently, as well as ensuring every stage of the process is explained clearly to the customer.
It says all phone conversations with consumers should be recorded and catalogued, that firms should be able to show evidence of audit trails, and demands consumers are explained the consequences of non-disclosure.
Members have until 31 August 2008 to implement the changes.
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“The debate on wet signatures is itself missing the point. As the Japanese say, we need to: ‘Fix the problem not the blame’. The problem is non-disclosure; the argument for a signature is purely about blame when there is a dispute on non-disclosure at the claim stage. We should be fixing the problem – i.e. fix the application process, so the amount of non-disclosure is minimised, and hence if the report is singed or not becomes an irrelevance. I do agree with Andy Milburn that all Tele-interviewed reports should be sent to the applicant for their review, but this does not necessitate a signature.” Andrew Gething, managing director, Morgan AshIFAonline
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