The FCA has published a policy statement on Handbook changes to improve competition and protect home and motor insurance customers from loyalty penalties (PS21/5).
This policy statement summarises the feedback the FCA received in response to its September 2020 consultation (CP20/19) and follows its final report on its market study on general insurance pricing practices (MS18/1.2), which it also published in September 2020.
The final rules can be found in the Non-Investment Insurance Product Governance, Premium Finance, General Insurance Auto-Renewal and Home and Motor Insurance Pricing Instrument 2021, which is set out in Appendix 1 to PS21/5. The package of measures includes:
- A requirement that where a firm offers a renewal price to a customer, this should be no greater than the equivalent new business price for a new customer.
- Changes to the FCA’s product governance rules to ensure firms have in place processes to provide products that offer fair value to customers.
- Rules requiring firms to offer a range of accessible and easy options for consumers who want to cancel auto-renewal on their contracts.
- Reporting requirements to facilitate the ongoing supervision of the home and motor insurance markets and to help the FCA monitor firms.
These rules will come into effect on 1 January 2022. Transitional provisions for the rules on pricing and auto-renewal disclosure will give firms until 17 January to put their processes into place, provided they backdate benefits to customers to 1 January.