The Financial Conduct Authority (FCA) is consulting on changing its rules for consumers disclosing personal information to insurers.
Under the mooted rules, consumers will no longer have to disclose all ‘material' facts to insurers for claims. Instead they will now have a duty to take reasonable care not to make a misrepresentation during precontractual negotiations.
The change will seek to align the rules with the Consumer Insurance (Disclosure and Representations) Act 2012 (the Act), which came in on 6 April 2013.
In quarterly consultation paper CP13/3 the regulator said: "If the consumer fails to take reasonable care, the Act states that an insurer is entitled to a remedy against the consumer, such as cancelling their policy and not paying any claims, or only paying a proportion of a claim.
"Whether or not a consumer has taken reasonable care not to make a misrepresentation is to be determined in the light of all the relevant circumstances. For example, the type of consumer insurance contract in question and its target market, any relevant explanatory material or publicity produced or authorised by the insurer and how clear and specific the insurer's questions were."
The FCA said this amendment would allow firms and consumers to have clarity about the standards expected.
It would also give the regulator scope to take "appropriate action if we see evidence that firms fail to comply with the requirements of the Act and consumers are not getting a fair deal."
Any comments on paper CP13/3 should be submitted to the regulator by 6 August 2013.
