The FCA has announced proposals to ban opt-out selling in financial services markets, including insurance. It is estimated that such products are worth £1 billion a year to the insurance industry, so if the proposals are implemented there are likely to be significant effects for insurers.
Under the proposals, firms would be prohibited from including add-on products by default when a consumer purchases a regulated financial product, i.e. firms would be prohibited from requiring a consumer actively to opt-out of the add-on product. For instance, this would prevent companies using pre-ticked online boxes to sell add-on insurance to consumers, such as legal expenses sold with home insurance, breakdown cover sold alongside motor insurance or protection cover when taking out a mortgage or credit card.
The announcement follows an FCA study into opt-out selling, which found that the practice of opt-out selling often results in consumers purchasing insurance products they neither want nor need. The FCA believes that the proposed ban will lead to a reduction in the number of customers that buy add-on products without realising.
At this stage, the FCA is still seeking views on its proposals, and the consultation period ends in June.We will monitor and report any developments as and when they occur.
More information can be found in the consultation paper at
https://www.fca.org.uk/your-fca/documents/consultation-papers/cp15-13 and the study into opt-out selling which has led to the proposals at: