Financial Conduct Authority to probe car insurance industry

City regulator to investigate how policies are priced after finding "hidden" discrimination between customers

Financial Conduct Authority to probe car insurance industry
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The Financial Conduct Authority (FCA) is to investigate how consumers are charged for car insurance after initial research identified “potential consumer harm”.

Early findings suggest insurance customers may pay different prices depending on how loyal they are, their age, and whether they are online.

Marital status, home postcode and employment status may also have a hidden effect on price, the FCA has said.

The investigation, which will also probe home insurance providers, will reveal the true pricing practices and help inform if and how the FCA should intervene.

Intervention

Andrew Bailey, FCA chief executive, 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.”

Loyalty penalty

Gillian Guy, chief executive of Citizens Advice, said: “We knew insurance companies were penalising loyal customers, but it is shocking that the FCA has found many companies don’t even seem to have oversight of how much they’re charging customers.

“”The FCA is treating the loyalty penalty seriously by conducting this review and scrutinising firms through a market study.

“We now expect strong regulatory action to stamp out this problem and enforcement against firms who are overcharging loyal customers.

“This is symbolic of a wider issue across essential markets like mortgages, broadband, mobile and savings.

“The Competition and Markets Authority needs to look very carefully at this as they respond to our super-complaint on the loyalty penalty.”

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