’If we see evidence of firms not having an objective and reasonable basis for taking such an approach, we will consider our supervisory approach on a firm by firm basis,’ says regulator
The FCA has issued a warning about “double dipping” during its investigation into the premium finance market.
In October 2024, the regulator said it would review whether motor and home insurance customers using the product, which allows people to pay for cover in instalments, were getting competitive deals.
Yesterday (22 July 2025), the FCA issued an interim update on the ongoing market study.
It said concerns had been raised that in addition to paying finance charges for premium finance, the decision to pay monthly may be factored into the pricing of the underlying insurance premium.
“This practice has been described as ‘double dipping’ by some commentators,” the FCA said.
“Our rules require that firms should not increase the insurance premium to customers using premium finance without objective and reasonable basis for the change.”
The regulator added that “some insurers have said the choice of payment method is correlated with insurance risk for those paying monthly”.
“If we see evidence of firms not having an objective and reasonable basis for taking such an approach, we will consider our supervisory approach on a firm by firm basis,” it said.
Other finding
In its update, the FCA also said that there is “wide variation” in the rates firms charge for paying by instalments, with significant differences according to how the insurance is distributed.
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“Typically, when firms charge extra for premium finance, the annual percentage rates (APRs) are in the range 20-30% but almost 20% of consumers pay over 30%,” the regulator added.
It also said: “While premium finance allows customers to spread costs, making them affordable and providing flexibility, the regulator has found that some firms earn much more money than it costs to provide it.
“It will explore these concerns further in the next phase of the study and will seek to tackle any issues it finds first through the Consumer Duty, publishing a final report by the end of 2025.”
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
He took up the position of deputy news editor at Insurance Times in March 2023, before being promoted to his current role in May 2024.View full Profile
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