TR15/5: Provision of premium finance to retail general insurance customers

Published: 11/05/2015     Last Modified: 11/05/2015

This report presents the findings from our thematic review which looked into whether general insurance intermediaries and insurers provide timely and appropriate information to their customers, when arranging or providing premium finance.

Why did we carry out this thematic review?

We were concerned that if firms are not meeting the information needs of their customers, then those customers may not be achieving fair outcomes when choosing to pay in instalments when buying insurance.

TR15/5 Provision of premium finance to retail general insurance customers [PDF]

Who should read this?

This report is aimed at general insurance intermediaries, insurers, relevant trade associations and consumer bodies.

What was the scope of the review?

We reviewed 43 firm websites, looking at insurers and intermediaries’ online sales journeys up to the point where the customer was required to input their payment details. In doing this we assessed whether firms were providing information to enable customers to make informed decisions regarding the options for paying for their general insurance product.

What did we find?

Our work identified that where arranging or providing premium finance for their retail customers, firms are not always meeting our expectations in ensuring their customers are able to make informed decisions.* In summary firms had not always provided clear and appropriate information:

  • on the payment options and the different costs associated with these
  • about the instalment option being offered
  • regarding the role being performed by the firm when arranging premium finance

These findings highlight that there is an increased risk that customers may not be achieving fair outcomes when purchasing insurance and linked finance. The shortcomings in information may act as a barrier to informed decision making as customers may, for example:

  • not realise the additional cost of choosing to pay by instalments
  • struggle to compare pricing
  • enter into premium finance arrangements without understanding the key features, terms and risks of the agreement

*References to potential shortcomings in compliance with our Consumer Credit sourcebook and the Consumer Credit Act apply to firms providing credit under regulated credit agreements or acting as credit brokers.  

What are the next steps?

We expect firms to consider the issues we have identified and to take action to address the shortcomings and ensure they are complying with their regulatory requirements in this area.

We will also be taking the following actions as a result of our findings:

  • supervisory engagement with firms to ensure that they address specific issues identified during our review
  • requesting further information and taking appropriate action with individual firms where the information reviewed to date indicates specific potential failings or poor practice
  • providing feedback and engaging proactively with the wider industry, including trade bodies, on our findings and expectations
  • engaging with consumer bodies to increase consumer understanding and awareness

More information

FCA review reveals shortcomings in the provision of premium finance for general insurance

FCA Factsheet March 2013 – Broker arranged premium finance plans for commercial customers

Back to top >