According to the regulator, the Financial Conduct Authority (FCA), says that insurers are not being transparent enough about how much their policies cost when paid in installments.
Most insurance companies offer customers the choice between paying their premium either monthly or yearly. However the regulating body for insurance companies has released a report that states that insurers are not making it easy for potential customers to see the difference in price of the two payments.
They said that the biggest problem this creates is that it makes it difficult for consumers to compare the various products on the market.
The FCA stated that it is often far too complicated for users to see how much they will be paying if they choose to settle their costs in a monthly plan. It was often the case that people may not have even known that there was a price difference between the two.
The main subject of the FCA’s investigation were car and home insurance plans that are being sold online.
They examined 13 different insurance companies and about 30 intermediate firms.
Linda Woodall of the FCA said:
“Consumers should expect clear information about the payment options available to them.”
“Regardless of whether people choose to pay upfront or in instalments, it’s important that they can see exactly what they are signing up for and how much it costs, so they can decide whether they are getting a fair deal.”
They also looked into the behaviour of companies that supply credit. The report stated that many of these firms failed to make it clear to their customers how much they would be paying in interest.
They also said that in a few cases of credit brokers, it was not even made clear that a fee was going to be paid at all.
A representative of the Association of British Insurers (ABI) said:
“Insurers want to ensure that any premium finance options are clearly and fully set out as part of the sales process, so that customers know exactly how much they have to pay for their insurance.
“Our members will be carefully considering the findings of this FCA review to ensure that all motor and household insurance customers understand the cost of the different premium payment options.”
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