Read one of the articles from our latest newsletter - The RAG. If you'd like to read more click here.
Consumer Focus has published a mostly negative Report, called In Case of Emergency, on the legal expenses industry and in doing so has made the strongest case yet for its own abolition. The soon-to-be abolished quango’s findings are riddled with errors, misleading conclusions and ill-informed comment. Indeed, some of the errors are so serious they undermine the Report’s credibility.
Following discussion with ARAG’s MD, Tony Buss, Consumer Focus have put their hands up and admitted mistakes, and have also made some factual corrections. Whether this is sufficient to quell its headline-grabbing scaremongering on the Before-the-Event (BTE) market remains to be seen.
The watchdog investigated the industry following LJ Jackson’s assertion that the BTE market can and should take up the cases his proposed reforms would remove from After-the-Event (ATE) funding and the government’s £350m legal aid cuts. It rightly concluded that the current legal insurance market cannot ‘fully’ fill the gap, but mostly for the wrong reasons. Somewhat bizarrely, it then added that over half the people who had made successful claims thought legal expenses insurance (LEI) was the only way to sort out their legal problem.
The Report highlights several negative opinions and
- says that product design should be harmonised between providers or the Key Facts provided to make them easier to understand and ‘shop around’. This ignores the reality of the add-on sales channel (referred to elsewhere in the Report) and that full documentation is automatically provided in accordance with FSA rules
- proposes a consumer information and knowledge campaign, headlining ‘Millions confused by LEI’, when corrected figures reveal a relatively high product knowledge (64%) with 48% and 16% respectively being either ‘satisfied’ or ‘very satisfied’
- proposes independent appeals when policyholders can already go to the FOS
- excludes favourable findings on BTE; for example, just 4% of respondents asserted they had received no policy information while 70% found the information ‘clear’ or ‘very clear’.
Looking at whether claimants should be able to choose their own solicitor, the quango proposed that they should despite acknowledging that premiums would rise and even more people on modest incomes would be denied access to justice. It makes some woolly assertions on impartiality and incorrectly mentions the Eschig case in support.
“We always welcome properly researched independent surveys but in our opinion this Report’s authors came from a state of ignorance and have not moved on”, comments Paul Hurley, Business Development and Marketing Director, ARAG UK. “We feel they are guilty of spreading disinformation that promulgates the ‘widespread confusion’ it alleges for LEI. Some of their findings and perceptions may be useful indications on the way policy information could be improved but overall the Report does far more harm than good and is ‘not fit for the purpose’: its own words in characterising LEI products”.
Hurley’s comments have been echoed in the insurance world but not on consumer websites or in social media, which failed to observe the discrepancies between conclusions and evidence.
Lesley Attu of ARAG UK has been elected as Chair of the working party which has been set up following an industry wide meeting of LEI providers, (facilitated by but independent of the ABI). The working party has been established to respond to recommendations of the Report. It will provide feedback on these recommendations and the degree of benefit they are likely to bring to consumers; with a view to engaging with the Ministry of Justice (MoJ) to support wider promotion of BTE.
Click here to read more artcles from our newsletter - The RAG