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According to the UK's financial regulatory body, the Financial Services Authority, insurance firms that cold call consumers to sell them insurance cover tend to provide poor quality sales, and the agency is now warning insurance companies to improve their standards when making unsolicited calls to consumers, and to refrain from rushing consumers into making a decision. The FSA found that many consumers were being pressured into making a decision on taking out insurance cover even if they were clearly unsure as to whether they wanted to take out the insurance.
The Financial Services Authority also claims that insurance company employees that make these unsolicited calls to consumers are often exaggerating the benefits of the cover in a bid to make the customer take out the policy, often because they can then earn commission off the sale, leaving the consumer with a policy that may not even provide any relevant benefits. These claims from the FSA come after forty three insurance companies were reviewed and their cold calling sales practices checked to see whether customers that were receiving unsolicited calls were getting a fair deal.
According to the Financial Services Authority insurance company staff were providing services that were of an 'acceptable standard' in cases where the consumer called the company to find out about cover. However, when the insurance company called the consumer in order to try and sell them cover the standard was generally unacceptable and the consumers were not receiving the fair treatment to which they were entitled.
Vernon Everitt from the FSA stated: '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.'
He added: '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 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.'
Tom Smith
09.05.07
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