FCA Says Insurance Payments Need To Be Clearer
The Financial Conduct Authority (FCA) has stated that insurance companies need to be more clear cut when it comes to the cost of paying insurance premiums in installments. According to the FCA: "Online sales by insurers, brokers and price comparison websites could leave people unaware of the difference between paying monthly or yearly."
The lack of clarity by these firms has made it more and more difficult to compare different insurance products. The FCA has said that they expect all firms to take the applicable action where necessary. The FCA added: "Our findings revealed that insurers and intermediaries do not always provide clear and easily understandable information about the overall cost of paying for insurance meaning that consumers could struggle to compare the difference between paying upfront or in installments. In some cases, people may not realise that there is a price difference between the two."
Online home and car insurance policies were the main focus of the investigation where potential customers are required to input their payment details. 30 insurance intermediaries and 13 insurers were included in the review as well as 4 price comparison websites. The FCA's acting director of supervision said: "Consumers should expect clear information about the payment options available to them. Regardless of whether people choose to pay upfront or in installments, it's important that they can see exactly what they are signing up for and how much it costs so they can decide whether they are getting a fair deal."
The FCA also said: "Firms providing regulated credit or acting as credit brokers are failing to provide a representative example setting out the interest rate, any fees or charges, a representative annual percentage rate (APR) and the total about payable which they are required to do."
A spokesman for the Association of British Insurers (ABI) said: "Insurers want to ensure that any premium finance options are clearly and fully set out as part of the sales process so that customers know exactly how much they have to pay for their insurance. Our members will be carefully considering the findings of this FCA review to ensure that all motor and household insurance customers understand the cost of the different premium payment options."
James Savery, 26 May 2015