Financial Conduct Authority (FCA) to launch market study into home and motor insuranceThursday, November 1, 2018
General insurance firms are to come under scrutiny from the Financial Conduct Authority (FCA) as the watchdog launches a market study into how firms charge their customers for home and motor insurance.
As part of its 2018/19 plan, the FCA said it would complete a piece of supervisory work on insurance pricing practices. The results of this work have caused the FCA to conclude that a package of measures is necessary. These measures will include:
- addressing conduct by firms
- a market study on general insurance pricing practices
- a wider discussion paper on fairness of pricing in financial services
The study will give the FCA a deeper insight into the scale of any harm to consumers from general insurance pricing practices, who it affects and, if required, what actions are need to be taken to improve the market.
The FCA is concerned that current pricing practices have the potential to cause harm, particularly to vulnerable customers.
Chief Executive, Andrew Bailey said, “Our initial work has identified a number of areas of potential consumer harm. We want to make sure that general insurance markets deliver competitive and fair prices for all consumers. This market study will help us examine the outcomes from general insurance pricing practices and inform how, if necessary, we should intervene to improve the market.
“If change is needed to make the market work well for consumers, we will consider all possible remedies to achieve this.”
A discussion paper will support the study
Alongside the market study, the FCA has also published a discussion paper setting out its approach to considering fairness of pricing in general. The FCA wants to hear views from stakeholders which will help to inform the judgement of when pricing is unfair in financial services markets. It is seeking input on the issues discussed in the market study terms of reference and accompanying evidence by 3 December 2018.
The FCA is aiming to publish an interim report in summer 2019 which will show initial findings with a final report and any proposed remedies set to be published at the end of 2019.