My Lords, all private health insurers must comply with Financial Services Authority requirements, including those for treating customers fairly, which include adherence to industry codes. The Financial Ombudsman Service takes account of all Association of British Insurers codes of practice in determining whether a complaint should be upheld and, if so, what the redress should be.
My Lords, I thank the Minister for that reply. Does he agree that it is outrageous that an insurer that says it offers full cancer coverage can stop payment for a cancer drug during treatment in complete defiance of that industry code of practice? Will he ensure that the consumer protection and markets authority, which I believe is being created, will properly cover the selling, and perhaps the mis-selling, of private health insurance?
My Lords, I welcome this Question from the noble Lord, Lord Crisp, and I appreciate the concerns that lie behind it. The process by which industry codes, which are not statutory, are enforced has a number of levels. First, the Association of British Insurers makes it a requirement of membership that codes are adhered to by all its members. Secondly, the Financial Services Authority has a process of confirmation of industry codes that are put in place. To be confirmed, those codes have to meet a series of guidelines as to form and content. The FSA takes account of non-compliance in its regulatory decisions. Furthermore, the ombudsman is required by the FOS rules to take industry guidance into account. Therefore, broadly speaking, if a complaint is brought and the code has not been adhered to, there should be a finding in favour of the complainant. I very much regret the situation that the noble Lord described, but it should be picked up if the processes are properly followed.
Is the Minister aware that his Answer and the Question reinforce the views of many of us about the great wonder of our National Health Service? This sort of thing does not happen in the National Health Service, and could not possibly happen unless the Government, under their present rather right-wing policies, change it. Is not the answer to this for people not to be fooled by thinking that they can opt out of problems by going private? The best thing they can do is to go to our NHS and support it solidly.
My Lords, I think that the scope of the Question is rather specific. It is about industry codes of practice and the adherence of private health insurance companies to those codes of practice. The noble Lord raises important issues, but they are rather outside the scope of the Question.
My Lords, I am grateful to my noble friend Lord Newby. On the basis of the published information from the Financial Ombudsman Service for the latest available year, 2009-10, there were 2,026 complaints relating to health and medical insurance companies, which was an 8 per cent increase on the previous year. About one-third of those cases were found in favour of the complainant, overturning the original decision of the company concerned.
My Lords, I believe that the noble Lord, Lord Crisp, has raised a very important issue. It is a very disturbing aspect of private health insurance that the providers of long-term cover often have the ability to vary the premium late in coverage, subject to what they euphemistically call contingencies. Is the noble Lord aware that such variations are supposedly subject to the FSA’s statement on fairness of terms in consumer contracts? I say supposedly because the statement offers only principles of fairness and no clear rules. Will the noble Lord adopt the position of the Prime Minister in his G20 Statement on Monday and encourage the introduction of clear rules in the regulation of this sensitive issue?
My Lords, I am grateful for the question because it enables me to go further in explaining what I think is a fair balance between non-statutory codes of practice and enforcement under the FSA statutory rules. This is a complex and sensitive area in which questions of acute and chronic care and other issues require constant review and updating in the codes. The balance between a code of practice which is reviewed on a regular basis by the ABI but is enforced in the way in which I have described strikes an appropriate balance.
In the light of the concerns expressed by my noble friend Lord Crisp and the question raised by the noble Lord, Lord Newby, in relation to the complaints against the companies which have been upheld, what sanctions have been applied to those companies in order to prove that those complaints were valid?
My Lords, will the Minister comment on whether the code includes the information that, in the event of serious complications, the patient may be transferred to National Health Service provision? The Government apparently intend on insisting that those coming from abroad to work—non-EU migrants—have private healthcare insurance. Will he also take into account that they and their employers should understand that many of us have been in NHS facilities to find that patients are being transferred from the private sector, to the annoyance of consultants?
My Lords, I have the 15 pages of guidance in front of me. It requires disclosure of a range of issues and it may be helpful if I send the noble Baroness a copy. I point out that the ABI is about to start its triennial process of consulting on any updating of the code and she might like to contribute thoughts during the consultation process.