FCA tackles shortcomings in insurance premium finance
The Financial Conduct Authority (FCA) has been reviewing the ways in which insurance companies provide finance to general insurance customer wanting to spread their premium payments over the policy term.
The regulator found that consumers may not be treated fairly when purchasing insurance in this way. Typically, they may:
- not realise the additional cost of choosing to pay by instalments
- struggle to compare pricing
- enter into premium finance arrangements without understanding the key features, terms and risks of the agreement
Apparently, finance firms are not always providing clear and appropriate information:
- on the payment options and the different costs associated with these
- about the instalment option being offered
- regarding the role being performed by the firm when arranging premium finance
The FCA says it will be taking action as a result its findings and will engage with consumer bodies to increase awareness of the issues.