Watchdog to ban pre-ticked insurance products that cost consumers £100m a year
The FCA found that about one in five people don't even realise they are purchasing the 'add-on' insurance cover costing consumers more than £100m every year
What are pre-ticked insurance products?
Pre-ticked insurance products are add-on products such as legal expenses cover and breakdown cover where the option for these products is already ticked on the application form. This opt-out form of product selling means that consumers are often not giving the purchase of this product enough thought or simply do not realise the cover has been automatically added in to the price.
What types of insurance products will be covered under the FCA ban?
The FCA ban will apply to any add-on products such as legal expenses sold with home insurance, breakdown or key cover sold with motor insurance and protection cover when taking out a mortgage or credit card. Companies will also be required to show the annual price of insurance products not just the monthly alternative. This is most likely to affect the mobile phone market where phones are typically promoted on a monthly price basis. The Financial Ombudsman Service has reported numerous cases where buyers of mobile phones have had insurance products costing up to £70 a year automatically added to their contract without the buyer's knowledge.
When will the ban on pre-ticked insurance products come in to force?
There will be a period of consultation with consumer and industry bodies with a view to agreeing remedies by the end 2015 followed by an accelerated timetable for implementation.
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