City regulator to probe home and car insurance pricing

The City regulator is investigating how fair insurance firms are being when charging customers for home and motor cover.
By The Newsroom
Published 31st Oct 2018, 16:31 BST
Updated 31st Oct 2018, 17:35 BST
The FCA has pledged action if neededThe FCA has pledged action if needed
The FCA has pledged action if needed

The Financial Conduct Authority (FCA) said the market study into firms’ pricing practices will give it a deeper understanding of the scale of any harm to consumers and who it affects.

If necessary, the FCA will intervene to improve the market.

The regulator has concerns that some pricing practices could potentially disadvantage some consumers significantly, in particular the most vulnerable and least resilient consumers.

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Practices it is concerned about include “loyalty pricing” where existing customers may be charged higher prices than new customers; as well as firms potentially charging different prices to different consumers based solely on how “price sensitive” customers are.

FCA CEO Andrew Bailey said: “Our initial work has identified a number of areas of potential consumer harm. We want to make sure that general insurance markets deliver competitive and fair prices for all consumers.

“This market study will help us examine the outcomes from general insurance pricing practices and inform how, if necessary, we should intervene to improve the market.

“If change is needed to make the market work well for consumers, we will consider all possible remedies to achieve this.”

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The regulator said it expects firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing, and has written to chief executives of firms about its expectations.

It has also identified potential non-compliance by some firms with its rules on transparency when policies come up for renewal.

The FCA said that, where it has concerns about conduct by firms, it will explore all options to address this using the full range of its powers.

Which? money expert Gareth Shaw said: “This review is long overdue. For years, loyal policyholders have been exploited by insurance providers, punished by excessive premiums, and have had to battle with unclear pricing that makes it difficult for people to understand whether or not they’re getting a fair deal.

Related topics:Practices