Motoring giant the RAC has admitted that its breakdown policy renewals should have provided clearer information, following an investigation by the regulator.
According to the Financial Conduct Authority’s (FCA) guidelines, customers should be able to see a prominently displayed figure to show how much they paid for their insurance in the previous and current year, as well as a statement encouraging them to shop around for the best new quote.
But the FCA has found that firms are failing to properly implement the rules, which were introduced in April 2017. This comes despite it issuing a warning in October that insurers were still not making their renewals clear enough.
In particular, the industry regulator found that the RAC was failing to display the prior and current year premiums, while the shop around message was not displayed as key information in its breakdown policy renewal documentation.
Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, says: “It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules.
“Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around. We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent.”
Dan Hutson, head of motor at comparison website Comparethemarket.com, adds that it is “very concerning” that some insurers are still flouting the rules.
He says: “The lack of transparency shown by a number of insurance providers is, at best, a gross oversight and, at worst, an effort to hide the renewal price hikes and the benefits of switching provider. Over the past few years, motorists faced constant hikes in their insurance costs, partly driven by government changes, such as increases in insurance premium tax and changes to the Ogden Rate [a system used to calculate compensation rates to accident victims]. The positive news is that the FCA is keeping a weather eye on the companies attempting to side-step the rules.”
I’m an RAC customer. What does this mean?
The RAC says it’ll be writing to affected customers in the coming months. However, it wouldn’t confirm if compensation will be offered.
An RAC spokesperson adds: “While our breakdown policy renewal documentation did accurately contain all the necessary information, we recognise that some of the key information in our letters was not as prominently displayed as it should have been.
“We continue to be committed to giving members clear and fair information, so they can make the right decision and are contacting those affected to ensure they are satisfied.”