1st April 2016
A ban on ‘opt-out selling’ in financial services means consumers will no longer have sneaky costs added to insurance policies.
The ban by the City regulator, the Financial Conduct Authority (FCA), comes into play today and will stop insurance companies adding optional extras at extra cost to insurance policies that the consumer then has to opt-out of.
The FCA has said this is unfair as it puts pressure on consumers to buy the additional insurance and they would have to act against what they presume is better judgement of the insurance company. By allowing opt-out selling customers have been paying for extra cover which they didn’t realise they had.
While the FCA’s original review addressed general insurance, it has been extended to cover all instances in financial services where an optional additional product is sold alongside a regulated products.
These include car insurance add-ons such as motor legal expenses insurance and breakdown cover. Home emergency cover and accidental damage cover are often added to home insurance policies and gadget insurance is typically added to travel insurance.
Taking out a mortgage can come with additional add-ons such as title indemnity cover, an insurance which is designed to provide legal support and a payout if title defects delay the sale or purchase of a house or lead to legal action by the local authority.
However, the ban will not apply to options selected on a price comparison website and the option to auto-renew as these routes of purchase both evidence active-election.
Best Price Financial Services operations manager Mal Evans said: ‘We welcome this ban and are wholly supportive of the change in business practice. However, we still feel that a lack of awareness that many of these products can be purchased on a stand-alone basis and not merely as an add-on to an insurance policy means that many consumers will still end up paying more than they have to.’