Generally, this means that a firm handling a claim should not put itself in a position where its own interest, or its duty to anyone for whom it acts, conflicts with its duty to a customer. If it does so, it should have the customer's prior informed consent.
If a firm acts for a customer in arranging a policy, it is likely to be the customer's agent (and that of any other policyholders). If the firm intends to be the insurance undertaking's agent in relation to claims, it needs to consider the risk of becoming unable to act without breaching its duty to either the insurance undertaking or the customer making the claim. It should also inform the customer of its intention.
A firm should consider whether it is possible to manage such a conflict through disclosure and consent. An example where these are unlikely to be sufficient is where the firm knows both that its customer will accept a low settlement to obtain a quick payment, and that the insurance undertaking is willing to settle for a higher amount.
Status: You are viewing the version of the handbook as on 2009-03-31.