FCA Review Reveals Shortcomings in Premium Finance for General Insurance

By Ian Walker

LONDON--The U.K. Financial Conduct Authority said Monday insurance providers don't always provide customers with clear information about payment options when they buy general insurance products, meaning they could struggle to compare the difference between paying upfront or in installments.

The review of online sales of home and car insurance products found that an adequate explanation of a proposed credit agreement wasn't always provided sufficiently early in the customer journey to enable customers to make informed decisions, and in some cases it wasn't made clear that a fee would be charged.

The FCA added that firms acting as a credit broker didn't always disclose the name of the credit provider or details of their relationship with the firm.

The regulator has been reviewing online sales of home and car insurance sales across 13 insurers and 30 insurance intermediaries, including four price comparison websites.

If a firm is providing regulated credit or is acting as a credit broker, they are required to provide a representative example setting out the interest rate, any fees or charges, a representative annual percentage rate and the total amount payable, the FCA said.

However, FCA researchers found a number of cases where this was either not provided or the example didn't include all of the required information, potentially limiting a customer's ability to make an informed choice about how to pay, the regulator said.

"Consumers should expect clear information about the payment options available to them," Linda Woodall, acting director of supervision at the FCA, said.

"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," she added.

Write to Ian Walker at [e-mail]; @IanWalk40289749

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