The FCA has published the findings of its thematic review (the Review) into the provision of premium finance to retail general insurance customers.
Consumer purchases of household and motor insurance total £17bn per year and with almost half of those purchases involving annual policies paid for in monthly instalments, the FCA is keen to ensure customers can make informed decisions and understand the nature of the service provided to them.
The Review focused specifically on the online purchase of premium finance, reviewing the websites of 43 firms, including the customer journey up to the point they are first required to input their payment details.
The FCA identified that many firms were not meeting its expectations, with deficiencies falling into three main areas:
- Firms not always providing clear and appropriate information on payment options and the different costs associated with these choices;
- Firms not always providing appropriate information about the instalment option being offered; and
- Firms arranging premium finance not always taking appropriate steps to provide sufficient, clear and consistent information to ensure customers understand the role they are performing, nor complying with Consumer Credit Sourcebook (CONC) obligations on credit brokers regarding disclosure of status (including links with lenders) and fees or commissions.
The FCA also raised concerns that pre-contractual information is not being disclosed sufficiently early in the customer acquisition process.
The Review indicates that the FCA believes these deficiencies could be a barrier to customers making informed decisions and may also indicate that firms are not in compliance with their relevant obligations under Principles for Business (PRIN), Insurance: Code of Business sourcebook (ICOBS) and, where applicable, CONC/Consumer Credit Act 1974 (CCA).
The FCA expects firms to:
- consider the issues identified in the Review;
- assess compliance with their obligations under PRIN, ICOBS and, where applicable, CONC/CCA; and
- address promptly any identified shortcomings.
The review can be read in full here.