The sales practice known as 'opt-out selling' is set to be outlawed under new proposals announced today by regulator the Financial Conduct Authority (FCA).
Opt-out selling is the practice of defaulting consumers into buying an add-on product which they then have to opt-out of if they don't want it, for example by unselecting a pre-ticked box on the financial service provider's website.
It often results in consumers purchasing an insurance product they don't need, while some are unaware they have even bought the add-on product at all.
Because of this, the watchdog has announced a consultation with the industry, open until 25 June, over the proposed ban, which would apply to any add-on sales offered alongside financial products. These include legal expenses sold with home insurance, breakdown or key cover with car insurance and protection cover when taking out a mortgage and credit card.
The FCA also wants firms to provide consumers with more appropriate information earlier in the selling process so they can make a more informed choice about whether they need any add-ons or not.
Making the right decisions
Christopher Woolard, director of strategy and competition at the FCA, said: "This is about ensuring consumers can make the right decision on what add-on insurance they do or don't need. Forgetting to un-tick a box at the end of a purchase is not making an informed choice.
"Our work shows that the opt-out model means too often consumers are buying a product when they have not been able to give any thought to whether or not they need it. We are all familiar with having to double check whether or not we have accidentally agreed to buy an add-on insurance product when buying car insurance or tickets online for example.
"These proposals will mean that consumers will be in a better position to decide what they want and consider the options available to them. Fewer consumers will end up with products they didn't want or don't even know they own."