The UK’s Financial Conduct Authority (FCA) will hold a review into insurance “add-on” products that are often sold with holidays, cars and gadgets.

It will focus on value for money and whether consumers understand what they are getting.

FCA CEO Martin Wheatley outlined the plans at the Association of British Insurers’ biennial conference last week.

“We heard stories from consumers who said they bought the add-on because it cost very little a month, or seemed worth it for the peace of mind and being covered if anything should happen,” he said.

“But in our early consumer research we found that the ‘peace of mind’ expectation was not always met. When we asked consumers to look at their policies many were surprised to find they hadn’t got the cover they expected.

“We heard some positive stories, but also about how some customers felt under emotional pressure to buy the add-on.”

Mr Wheatley’s speech also marked 100 days of the FCA, which replaced the Financial Services Authority in April.

Mr Wheatley says the FCA is “a very different animal” to its predecessor and his vision for successful regulation is based on creating successful, competitive markets.

“This is not a case of one side having to win and the other having to lose,” he said. “We each have a vested interest in making markets work well for all participants.

“Regulators need to serve the market better by acting more swiftly – by intervening earlier and more intelligently to avoid crises down the line. That process of repair is now under way. Our first 100 days are a marker of what lies ahead.”

He says the UK insurance industry “remains a pillar of the world economy”.