Regulator signals more assertive stance on insurance value and governance
Consumers paying for insurance monthly are saving a combined £157 million a year following a drop in premium finance charges, according to a review by the Financial Conduct Authority.
More than half the firms assessed by the regulator reduced the cost of monthly payment plans, with average annual percentage rates falling 4.1 percentage points since 2022.
The change has cut the average annual cost of premium finance by £8 for motor policies and £3 for home cover.
Firms considered at higher risk of failing to provide fair value made steeper reductions of 7 percentage points, saving drivers £14 and homeowners £4 per year.
The FCA said it had used new powers under the Consumer Duty regime, introduced in 2023, to press for fairer pricing without needing to introduce new rules. Nearly half of all motor and home policies (about 23 million in total) were paid monthly last year, often by customers who could not afford annual payments.
Graeme Reynolds, interim director of insurance at the FCA, said: “For millions, paying for insurance monthly is not a choice: it's a necessity.” While ruling out price caps or interest-free mandates, the regulator has published examples of good and poor practice and expects firms to continue reviewing their finance offerings.
Separately, the FCA has placed customer and capital restrictions on private equity-backed insurer Markerstudy, limiting its acquisition-driven expansion.
The constraints apply across more than a dozen regulated entities, including Swinton, Budget, Dial Direct, and Hughes Insurance, and require the group to stay within agreed limits on customer numbers and available funds.
The measures follow concerns over the insurer’s rapid growth and governance, and were implemented through voluntary requirements listed on the FCA register.