Mr. Gerry Cross:

I thank Deputy Doherty. As he has said, this work has been under way for quite a bit of time for a number of reasons. One is that, with an intervention of this kind in the market, which is very important and which will yield very significant benefits for consumers, it is very important to have a good understanding of what is happening in the market. I refer not only to how competition is working and what the practices within firms actually are but to how consumers are both understanding and reacting to the situation. For us, a key piece is that what was at the heart of this practice was firms observing a habit and a behaviour, that behaviour of loyalty, and taking advantage of that to their own benefit rather than to the benefit of the policyholders. We see that as unfair and, therefore, something to be proscribed.

As the Deputy has said, we have, in some respects, taken a different approach from that adopted by the UK in this regard. In particular, when we looked at the importance of stopping this harm and the way to do so, we could also see there were some benefits for new customers. New customers who shopped around and looked for better pricing could get a better deal. We discussed very closely among ourselves the question of how to retain that benefit, and we have ended up with a proposal in which the ban on price walking effectively kicks in from the second year, thereby allowing discounts for new customers. However, very importantly, it must be extremely clear that a price reflects a new customer discount and that the renewal price will be somewhat different. This addresses the question of behaviours being taken advantage of.

We believe we have the legal powers necessary for this. We set that out in our consultation paper. We can implement these requirements effectively and well through our consumer protection code. We have received a number of high quality and very valuable responses to our consultation paper. We are going through those and looking at whether there are aspects of our proposals that might be tweaked or improved. It is very important to say the substantive thrust of where we are going with this is not changing. I do not envisage that changing.