The UK’s Financial Conduct Authority (FCA) has announced a probe into the insurance pricing practices of firms. The move forms part of the financial watchdog’s 2018/2019 business plan.
Under this move, FCA will investigate the pricing policies of home and motor insurers. The reference terms for the study are expected to be released in a few weeks.
FCA CEO Andrew Bailey said: “We expect firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing. 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.”
The announcement by FCA coincided with charity network Citizens Advice lodging a super-complaint with the Competition and Markets Authority (CMA).
Citizens Advice alleged that long-term customers have to pay a “loyalty penalty”. According to the charity, such customers were being overcharged £4.1bn annually.
The charity claims that loyal customers across household insurance, savings accounts, mortgages, mobile, and broadband have to pay significantly more than new customers.
The competition regulator will consult with the FCA and Ofcom to assess the concerns and come up with remedial measures.
CMA senior director Daniel Gordon said: “We will now carefully consider the concerns raised by Citizens Advice, and any further evidence on this issue.
“Our response will set out the CMA’s views on this important issue and any next steps we think are needed to make sure businesses don’t take unfair advantage of their long-standing customers.”