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CASE STUDY

Primary Authority advice for property insurance claims

Introduction

MA Assist set up a Primary Authority partnership with Northamptonshire County Council in 2015 to consider the implications for the insurance industry in relation to the new consumer rights regulations. This advice sets the framework for Trading Standards Authorities all over the UK for consumer complaints in relation to property insurance claims. In this paper we present the key points that arise from the advice.

Primary authority – what is it?

Primary Authority is a statutory scheme, established by the Regulatory Enforcement and Sanctions Act 2008 (the RES Act). It allows an eligible business to form a legally recognised partnership with a single local authority in relation to regulatory compliance. This local authority is then known as its ‘Primary Authority’, and any guidance or ruling that it provides is applicable across the whole of the UK.

The Primary Authority scheme is designed to achieve better regulation at local level, promoting consistency across council boundaries, encouraging a new relationship between local authority regulators and giving businesses the confidence to invest and grow. The scheme is designed to drive efficient, effective and consistent regulation across the system for the benefit of all. It prevents inconsistent interpretation of regulations and applies regardless of where stores, factories or offices are based or products are sold.

MA Assist entered into a Primary Authority partnership with Northamptonshire County Council to understand the regulatory issues surrounding the surveyor-led model and cash settlements.

The advice

Below is a summary of the Primary Authority guidance issued to MA Assist. The two key pieces of legislation that are addressed are The Consumer Rights Act 2015 (from 1st October 2015) and The Consumer Protection from Unfair Trading Regulations 2008.

An omission of information or misleading statements given to consumers can be a criminal offence if they cause the consumer to take a transactional decision he would not otherwise have taken. When information is given to a consumer it should be sufficient for the average consumer to take an informed transactional decision. Specifically, a criminal offence could exist if:

It is not sufficient to assume that a consumer is aware of all of the facts and information that has been provided to them, e,g, the details of a policy document, particularly in relation to vulnerable groups. A misleading omission can occur if a consumer is not “average” and is unable to make an informed transactional decision with the information provided to them at the time of the survey and/or cash settlement.

To effectively force a consumer to accept a cash settlement, particularly where the insurance contract allows for other remedies, could be considered an aggressive practice which is a criminal offence.

A breach of the Consumer Rights Act 2015 could occur when a surveyor is not given sufficient time on site to ensure that the work is carried out with reasonable skill and care and within the terms of the insurance contract. Where the consumer suffers a loss as a result (e.g. an under-valued cash settlement and/or inadequate repair works) and a suitable remedy is not provided by the insurer, damages can be awarded through the Courts.

The insurer is liable for any breach of these regulations unless it can demonstrate that it was not aware of its suppliers’ practices and/or it had in place reasonable due diligence processes and precautions. The test for reasonable due diligence processes and precautions for a large insurer will be commensurate with the resources available to the insurer, and so would be quite onerous.

Consumer Rights Act 2015

The Consumer Protection from Unfair Trading Regulations 2008

To read the full advice from Northamptonshire County Council Trading Standards please CLICK HERE.