The Financial Conduct Authority (FCA) has recently stated that some insurance companies aren’t being transparent enough when it comes to premiums being paid in instalments and the added cost this often implies. Those in the insurance industry will already know that the clearer you are about the services you offer the better, however sometimes this can be forgotten when presenting information to customers online.
The FCA has claimed that insurers, brokers and price comparison sites sometimes leave people confused as they don’t always make the difference between paying annually or monthly obvious, making it difficult to compare products fairly. After realising this, the FCA has said that they expect all firms to take action to change these confusions.
Those that have worked in the insurance industry for a number of years will not be shocked at the FCA’s decision to require brokers and insurance providers to make their information clearer. Over the years there have been numerous changes implemented by the FCA with the aim to ensure that customers know exactly what they are purchasing, and this is no different.
According to the FCA, some of the information provided by insurers or intermediaries is not clear or easy for consumers to understand, especially when it comes to the overall cost of the service or product. Consumers have claimed that they often struggle to see the difference between paying in instalments or upfront, meaning that they don’t even realise that there is a price difference between the two.
The FCA’s claims are based on extensive research into online sales of car and home insurance policies. They tested the whole buying process up to where the customer puts in their payment details on 30 insurance intermediaries, 13 insurers and 4 comparison sites.
Acting director of supervision at the FCA, Linda Woodall, 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.”
It has also been revealed that some firms who provide regulated credit or act as credit brokers have been failing to give fitting examples of monthly payments and the associated interest rates, fees or charges, representative annual percentage rates or the total amount payable. Worryingly, in a few situations it was also not made clear that a fee would be charged by firms using a credit broker.
A spokesman for 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.”
Clarity is always important when it comes to any form of financial product, and even though some claim that consumers are able to receive this information should they request it, the fact is that it should always be presented at the beginning of the quotation process. For example, those looking for motorhome insurance may not have an extensive understanding of how insurance payments work or their rights when it comes to requesting this information.
To help such customers, it’s essential that you consider how your information is being presented, whether online or in any other format. Luckily, online quote engines often provide flexibility when it comes to design which means you can make sure that the costs for both annual and monthly payments are presented clearly. That way, not only will you remain within the FCA’s regulations but also provide your customers the ability to make an informed purchase.