FCA to launch dual pricing investigation in “a few weeks’ time
Regulator makes promise as Citizens Advice launches £4bn super-complaint.
The Financial Conduct Authority (FCA) has promised to launch a market study looking at how general insurance firms charge their customers for home and motor insurance.
According to the regulator the terms of reference for the market study will be published in “a few weeks’ time”.
The national charity slammed the practice of overcharging loyal customers and warned again that consumers are being ripped off.
Home insurance was cited along with the mobile, broadband, mortgages and savings industries as the organisation stated customers who stay loyal to their providers are losing out on over £4bn a year.
Citizen’s Advice chief executive Gillian Guy said: “It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal.
“As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam.”
The topic of dual pricing has been gathering increasing momentum over recent months.
In May the Association of British Insurers teamed up with the British Insurance Brokers’ Association to tackle dual pricing in personal lines with a set of Guiding Principles and Action Points.
This July the Chartered Insurance Institute’s Public Trust Index, found that dual pricing was the number one concern for consumers who perceive the practice as a lack of loyalty from their insurer.
And in August a survey by Which? showed dual pricing in home cover with some long term policyholders paying up to £105 more than new customers.
In response to the latest news Andrew Bailey, chief executive of the FCA confirmed the regulator would work closely with the CMA in the investigation of the super-complaint and stated that Citizens Advice had raised a number of important issues.
He continued: “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.”
Bailey concluded: “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.”