British insurers could face a raft of a fines with the financial regulator if they don’t “take action where necessary” to fix how they provide customers with clear information about the different payment options available, when buying general insurance products.
The Financial Conduct Authority unveiled a report today that after reviewing 13 insurers and 30 insurance intermediaries, which includes four price comparison websites, it found that these groups did not always provide clear and easily understandable information about the overall cost of paying for insurance.
The FCA tested out what the customer’s journey from looking for an insurance product to the point where they put in their payment details to purchase it.
The watchdog said that the lack of clear overall payment costs would mean that customers would struggle to compare the difference between paying upfront or in instalments. It added that many people may not realise there is a price difference between the two and could struggle with the payments as a result.
“Consumers should expect clear information about the payment options available to them,” said Linda Woodall, acting director of supervision at the FCA . “Regardless of whether people choose to pay upfront or in instalments, 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 review also identified a wide range of APRs, highlighting the importance to customers of having appropriate information to be able to compare pricing and understand the impact that the cost of finance has on the overall cost of an insurance product.
The FCA also revealed in its statement another range of issues and how it plans to address these points with the insurers:
- An adequate explanation of a proposed credit agreement was not always provided sufficiently early in the customer journey to enable customers to make informed decisions.
- Firms acting as a credit broker did not always disclose the name of the credit provider or details of their relationship with the firm
- In some cases it was not made clear that a fee would be charged.
- The FCA expects all firms to consider the findings of the review and take action where necessary.
- It is also following up with individual firms where it found specific examples of failings and poor practice.