Esure changes cancellation terms after FCA intervention

Esure has changed the cancellation terms of its home and car insurance policies following intervention by the Financial Conduct Authority (FCA).

The FCA said two of Esure’s terms and conditions gave it too much discretion to cancel a customer’s policy and were likely to be unfair under the Unfair Terms in Consumer Contracts Regulations.

Esure’s policy documents had included cancellation terms that allowed it to cancel a home or car insurance policy at any time, with seven days’ notice in writing, without having to explain why. The policy documents also contained terms to allow Esure to cancel a policy and charge an administration fee if the customer missed a premium payment.

“In our view these terms meant that without good reason consumers could be left uninsured and perhaps find it difficult to arrange insurance elsewhere following a potentially unjustified cancellation,” the FCA said in a notice issued today.

The regulator also said it would be disproportionate to cancel a policy if a direct debit failed for reasons outside the customer’s control if they could rectify the situation given the chance.

Esure said it only cancelled policies when a customer missed a payment or failed to provide evidence of a no claims record. In those cases, Esure said it would contact the customer and give them more than seven days to resolve the matter, and only used the terms in exceptional circumstances such as suspected fraud.

It agreed to change its cancellation terms to set out the valid reasons it would rely on to cancel a policy.

Esure will also change its wording to explain its procedure for cancelling policies and how consumers can complain if they have concerns.

The changes will appear in new policies from 3 November and the firm will apply them to existing customers.The changes will also apply to Sheila’s Wheels, Sainsbury’s Car Insurance and First Alternative, which use Esure’s policy wording.

Esure also agreed that its automatic renewal terms were unclear and has deleted a clause which suggested customers could renew their home or car insurance policies with a different insurer. Esure said it had never relied on this term.