Insurers are failing to provide customers with easily understandable information about the costs of insurance products, according to a review by the Financial Conduct Authority (FCA).
The review found that consumers are not always made aware of the different ways of paying for insurance. This makes it harder to compare the price differences between paying upfront and in instalments.
Researchers also found examples of credit brokers not providing information about interest rates to their customers. Firms that provide credit and acting credit brokers are required by law to provide clients with a representative interest rate, annual percentage rate, the total amount payable and any other fees and charges associated with the product.
The financial watchdog examined 13 insurers and 30 insurance intermediaries, including 4 price comparison websites.
The FCA also found that:
- clear explanations of proposed credit agreements were not always given early enough to allow customers to make informed decisions
- acting credit brokers did not always provide customers with the details of the credit provider
- it was not always clearly disclosed that customers would be charged a fee.
The regulator is calling on all insurance providers to take action based on the review’s findings.
Linda Woodall, acting director of supervision at the FCA, said:
“Consumers should expect clear information about the payment options available to them. Regardless of whether people choose to pay upfront or in instalments, 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.”