Home / International / FCA outlines ‘radical’ moves on premium pricing
28 September 2020
The UK Financial Conduct Authority expects new laws to ban pricing practices that disadvantage loyal customers will take effect next year as part of a proposed package of reforms.
The changes would mean a customer renewing their home or motor insurance would pay no more than if they were a first-time purchaser through the same provider, and cracks down on “price walking” practices that affect loyal customers over time.
“We are consulting on a radical package that would ensure firms cannot charge renewing customers more than new customers in future, and put an end to the very high prices paid by some long-standing customers,” Interim CEO Christopher Woolard said last week.
“The package would also ensure that firms focus on providing fair value to all their customers.”
The FCA also proposes new data reporting requirements, so it can check rules are being followed, and making it simpler to stop automatic renewals.
The regulator has sought comments on its proposals by January 25, and expects the new rules would come into effect four months after publication of its policy statement.
Association of British Insurers Director General Huw Evans says it is vital that price comparison websites and insurance brokers are subject to the same level of supervision and monitoring by the FCA to ensure a balanced approach.
“We will consider this package of proposals, so that we can engage with the FCA on the most effective measures possible,” he said.
The FCA says a measure of success from the measures would include less switching, but the British Insurance Brokers Association says it’s important to remember that price is not the only consideration.
“Our broker members always aim to offer their customers insurance that meets their needs both in terms of price and cover,” CEO Steve White said.
“Their long-held concerns about dual pricing will be addressed by the FCA’s proposed measures and we look forward to working with the regulator constructively.”