The Financial Services Authority has ordered the National House-Building Council to amend the contract terms of one of its insurance policies and is warning other insurance firms that customers must be given appropriate policy information.
In a notice on its website, the FSA says that the contract terms for the NHBC’s Buildmark product – an insurance policy which covers defects in the way a new home is built – were found to be unfair.
This is because the contract defined ’defect’ as a breach of the NHBC requirements, but it failed to set out what those requirements were.
The FSA therefore ruled that consumers would not know whether they were entitled to make a claim under the policy as they would not be able to determine whether the requirements had been breached.
It says the contract term has now been amended so that the word ’defect’ refers to a new page in the policy document where the NHBC requirements are set out.
The regulator says it is reminding firms of the Insurance Conduct of Business rule 6.1.5 which states that: “A firm must take reasonable steps to ensure a customer is given appropriate information about a policy in good time and in a comprehensible form so that the customer can make an informed decision about the arrangements proposed.”
It adds that the NHBC was fully co-operative in the matter.