In our last newsletter we reported on the provisional findings of the Financial Conduct Authority (FCA) on its market study into general insurance add-on products. The FCA has published its final report on the market study and has published its final findings that:
- the add-on mechanism has a clear impact on consumer behaviour and often affects consumers' decision-making; and
- many consumers are getting poor value and there is a lack of transparency and comparability about the value provided by general insurance products.
The FCA identified particular concerns about ineffective competition in the add-on GAP market and the majority of feedback received by the FCA focused on the GAP market.
The FCA has proposed the following remedies:
- "a deferred opt-in" to impose a break between purchase of the primary product and the add-on GAP;
- a requirement to tell the customer, if the GAP is offered at point of sale, that they can buy the product elsewhere and to provide information on how to shop around;
- banning the use of opt-outs (for example, pre-ticked boxes);
- improvements to how price comparison websites provide add-on options and pricing; and
- a requirement to publish claims rations.
Consultation is to take place on the proposed remedies later on this year.