The ABI's code on misrepresentation claims covers what the industry still calls non-disclosure, discovered at the point of claim, for example when medical records contradict an answer on the application. If the customer complains, the Financial Ombudsman Service says it will need the insurer to evidence what was asked and answered, and names recordings of the sale call among that evidence. For a firm advising on life, critical illness and income protection, that makes the call worth checking against the form while a gap can still be raised with the insurer.

The legal duty sits with the customer. The call records the question asked and the answer given; set beside the application, it shows whether that answer arrived intact.

The duty is the customer's, owed to the insurer#

Section 2(2) of the Consumer Insurance (Disclosure and Representations) Act 2012 puts it in one sentence: "It is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer." Section 2(4) says that duty replaces any earlier duty relating to disclosure or representations in the same circumstances.

The statutory question is reasonable care not to misrepresent, and the adviser does not owe that duty. That changes how a compliance lead should read a mismatch.

Section 3 judges reasonable care in the light of all the relevant circumstances, against the standard of a reasonable consumer. Its examples include "how clear, and how specific, the insurer's questions were" (s3(2)(c)) and "whether or not an agent was acting for the consumer" (s3(2)(e)). Section 5(5)(b) presumes, unless the contrary is shown, that the consumer knew a matter was relevant to the insurer where the insurer asked a clear and specific question about it.

Both turn on the question. Where the adviser completes the application on the call, the question the customer hears is the one the adviser reads out.

What an insurer can do, in outline#

An insurer has a remedy only for a qualifying misrepresentation (s4): the consumer breached the s2(2) duty, and the insurer shows it would not have entered into the contract at all without the misrepresentation, or only on different terms. Section 5 classes it as deliberate or reckless, or careless, and s5(4) puts it on the insurer to show deliberate or reckless.

Schedule 1 Part 1 sets out the remedies. Deliberate or reckless: the insurer may avoid the contract and refuse all claims, and keep the premiums unless that would be unfair to the consumer. Careless: the remedy follows what the insurer would have done: avoiding the contract but returning premiums, treating the contract as made on different terms, or reducing the claim proportionately where it would have charged a higher premium, and the last two can apply together. None of this predicts any particular claim.

Where the adviser comes in#

ICOBS 5.1.4G is guidance for insurance distributors. It lists "ways of ensuring a customer knows what he must disclose", including (3) explaining the consumer's responsibility to take reasonable care not to make a misrepresentation, and the possible consequences, and (4) "asking the customer clear and specific questions about the information relevant to the policy being arranged or varied". Guidance suggests; it does not require.

Schedule 2 to the Act decides, for the Act's purposes only, whose agent the intermediary is. The cases where it is the insurer's agent include acting as the insurer's appointed representative, and collecting information from the consumer with the insurer's express authority. Otherwise it is presumed to act for the consumer, unless in the light of all the relevant circumstances it appears to be acting as the insurer's agent. Which applies to your firm is a question for your own legal advice.

The ABI Code of Practice on misrepresentation claims for life, critical illness and income protection, in its July 2023 edition, is addressed to insurers. Where it goes beyond the law, compliance with it is voluntary, though it notes that the Financial Ombudsman Service may judge whether a firm acted fairly by reference to it. At 3.4.4 it says that where the intermediary was clearly acting for the customer, an independent financial adviser for example, the intermediary rather than the insurer should be accountable for a misrepresentation resulting directly from its own action or omission. That is the Code's view, not the Act's.

None of these requires an advice firm to record calls, check the application against the call, or monitor disclosure answers. The case for doing so is about evidence.

Where the call becomes evidence#

The Financial Ombudsman Service's consumer page on misrepresentation and non-disclosure is an explainer, not a rule. It says the insurer will need to provide evidence of the questions asked and the answers given, and its examples include recordings of the sale call and copies of the application form.

The ABI Code points the same way. At 3.1: "Customers cannot be expected to provide information that they are not asked for." At 3.2.1 it asks how clear and concise the relevant questions were, and gives little weight to catch-all or memory-test questions. At 3.2.2.2 it asks whether the customer had the opportunity to check their answers. And at 3.4.3, the insurer "will always benefit from being able to provide an audit trail – regardless of whether the sale was intermediated – to show that clear questions were asked and understood, and that the customer had the opportunity to check and confirm the accuracy of their answers".

On an advised phone sale, part of that audit trail exists only as audio: the questions as spoken and the answers as given.

The ABI's Case 14: the question asked was not the question on the form#

The Code's appendix, which it describes as entirely illustrative, includes Case 14. A woman takes out combined life and critical illness cover and declares she is a non-smoker. After an otherwise valid claim for cancer, her medical records show she smoked six months before the policy started, and at the time of the claim. She said she had given up when she found out she was pregnant, which was when she took out the policy, and the evidence supports that.

Her adviser, an employee of the insurer, filled in the application online. She recalls being asked only whether she was a smoker, not whether she had used tobacco in the preceding 12 months, as the application asked. She accepts she should have checked the copy sent to her more carefully.

The Code's view is that the insurer is likely to accept her explanation as credible, given the evidence of the pregnancy, and not avoid the policy, treating the misrepresentation as careless and applying a proportionate remedy. Then the line that matters here: if she had not been asked to check the application, then because she answered the question asked by the adviser, who was acting on behalf of the insurer, to the best of her knowledge and belief, there would have been no misrepresentation and the claim should be paid in full.

An illustrative case is not a ruling. But it turns on two things a recording and its paperwork can show: the question the customer actually heard, and whether they were given the chance to check what was submitted. Her adviser worked for the insurer; where an adviser firm is clearly acting for the customer, 3.4.4 says that firm, not the insurer, should be accountable for a misrepresentation resulting directly from its own action or omission.

What a compliance lead can check on the calls#

What follows is our view of good practice, not a regulatory requirement.

  • The insurer's question, read as the insurer wrote it. "Are you a smoker?" and "Have you used tobacco in the last 12 months?" are different questions. Case 14 turns on that gap.
  • Answers played back and confirmed. Reading key answers back is one way to give the customer the opportunity to check their answers that 3.2.2.2 asks about. In Case 14, that opportunity was a copy of the application.
  • Disclosures made in passing, carried onto the form. A customer who says "I had a scan on my knee in the spring, but that's nothing" has mentioned something a medical question may well cover. If the form says no to tests or investigations, someone should look.
  • Answers that change between calls in the same sale. An occupation or GP visit described one way on the first call and differently on the next. Either may be right; the form should match the one the customer settled on.
  • The completed application sent back to the customer, and whether they were asked to check it.

A mismatch between call and form is not proof that anyone did wrong. The customer may have corrected an answer later, and the form may be right where the conversation was loose. The point is to find the gap while it can still be raised with the insurer.

The first two checks are behaviours on a call and can be written into a scorecard like any other criterion, which is the ground covered by call monitoring for FCA-regulated advice firms.

Where CallGuard fits#

CallGuard AI scores calls, or all the calls in a sale together, against your firm's own scorecard. For the third check, Reconciliation compares what the customer said on the calls in a sale with the answers submitted on the insurer's application. Finding each question on the call and comparing the answers are rule-based; a model reads the customer's answer from the passages found, and its reasoning is kept for a person to weigh. An application format it has not seen is parked for a person, not guessed. A mismatch is a flag for your team to review, with a passage from the call and the reasoning behind it where there is any, not a verdict on the adviser.

Two limits matter for this post. Health details a customer names, such as a condition, test or treatment, are redacted from transcripts by default, so a disclosure made in passing usually cannot be read. That item is marked "could not verify", not a match. Plain yes or no answers are still compared. Keeping health details readable is something CallGuard sets up with a firm, with a DPIA. And the fourth check, an answer that changes between calls, is still a reviewer's job. Reconciliation reads one answer per question and does not flag that an answer changed between calls, so a match does not show the customer said the same thing each time.

It reads insurer applications for fully underwritten protection, not lender applications. It is on the Pro plan, switched on per firm by CallGuard staff, and runs once the insurer's application PDF is on the sale record in your CRM. We do not publish an accuracy figure for it yet. If you are comparing tools, we have written up how we differ from Recordsure and Aveni.

Our demos use synthetic calls, and a DPA comes before any of your real recordings.