FCA accuses online insurers of lacking pricing transparency

Insurance firms, brokers and price comparison sites are not being transparent in communicating the price of paying premiums in instalments according to The Financial Conduct Authority (FCA).

FCA: regulator accuses insurance firms of lacking transparency on pricing
FCA: regulator accuses insurance firms of lacking transparency on pricing

The watchdog has accused insurers and price comparison sites of "not always providing customers with clear information about the different payment options available" when consumers buy general insurance products online.

The regulator’s review was focused on the online sale of home and car insurance, tracking the customer journey up to the point of purchase, where consumers are asked to enter their payment details.

The review found that companies do not always clearly convey easily understandable information about the overall cost of paying for insurance, with confusion arising over the difference in paying upfront or in instalments. It reported: "In some cases, people may not realise there is a price difference between the two."

The FCA examined the sites of 13 insurers and 30 insurance intermediaries, including four price comparison websites.

Businesses that offer credit through instalment payment schemes are required to provide a representative annual percentage rate (APR) and the total amount payable. "However," according to the review, "FCA researchers found a number of cases where this was either not provided or the example did not include all of the required information, potentially limiting a customer’s ability to make an informed choice about how to pay."

Linda Woodall, 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 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."