What the CIDR Act 2013 means for insurers and insureds

As a result of the recent entry into force of the Consumer Insurance (Disclosure and Representations) Act (CIDR) 2012, insurers and insureds will have to be aware of changes affecting the treatment of consumer complaints by the Financial Ombudsman Service (FOS).

These changes are part of a wide reform of financial regulation in the UK. With effect from 1 April 2013, the Financial Conduct Authority (FCA) assumed regulatory control of the UK financial services sector, including the insurance industry, from the Financial Services Authority. The change is designed to be seamless, with the FCA largely staffed by the same people, regulating the same financial services firms using virtually the same handbook. FOS will continue to co-operate and communicate with the FCA under the terms of a memorandum of understanding while remaining independent of it.

At the same time, fundamental changes have been made to the legal framework within which FOS works, with the coming into effect of CIDR. As a result, a consumer insurance contract entered into after 6 April 2013 will not be subject to the requirements of the utmost good faith as set out in the Marine Insurance Act 1906; instead the insured is under a duty to take reasonable care not to make a misrepresentation to insurers…

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