The UK Financial Conduct Authority (FCA) is planning a market study into how insurers charge home and motor premiums, amid growing concerns loyal clients are being unfairly penalised.

It will issue in the next few weeks the terms of reference for the study, which is part of the FCA’s 2018/19 business plans to look into the industry’s pricing practices.

“We expect firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing,” FCA CEO Andrew Bailey said.

“It is important to get the balance right so that existing customers do not miss out on the benefits of competition and innovation, including when they purchase or renew their general insurance products.

“The general insurance market study we have announced today will help us examine the issues we have already identified in the market in more detail.”

Lobby group Citizens Advice submitted a so-called super-complaint to the Competition and Markets Authority, listing insurance as one of several markets where loyal customers can end up paying more than new clients.

And a recent survey by consumer champion Which? shows thousands of residents pay “excessive” home premiums as a “punishment for loyalty”.

The Association of British Insurers (ABI) and British Insurance Brokers Association have jointly launched an action plan to tackle the problem.

“In a competitive free market, where three out of four people shop around, there is no easy fix available and these measures will take time to bed in,” ABI Director General Huw Evans said.

“But we believe that these industry commitments are a positive step in tackling excessive premium differences that can unfairly penalise long-standing customers.”