The Financial Conduct Authority (FCA) have announced plans to investigate whether certain insurance sales to consumers offer value for money.
Insurance ‘Add-ons’ – for example, offers immediately after purchasing a product to insure against breakages or loss – will be investigated by the FCA, according to its Chief Executive Martin Wheatley at the Association of British Insurers conference in London today.
Areas to be examined include mobile phone protection and the pricing of automatic policy renewals on home and car insurance.
The FCA is reviewing sales practices across the insurance industry, following loan insurance misselling scandals that dogged the former industry watch-dog, the FSA. The payment protection insurance (PPI) misselling scandal has so far cost the industry £9 billion in lawsuits and compensation.
The FCA is more powerful than its predecessor: unlike the FSA, it can ban and change products in order to improve competition and protect consumers, cited as ‘the single most significant change in our objectives as a regulator’ by Wheatley.
‘It means that we don’t just wait for problems before we try to promote competition in the markets we regulate.’