FCA issues warning to young drivers over social media scams

The FCA has issued a warning to young drivers over the rise of fake motor insurance policies being sold over social media.

It cautioned that a growing number of ghost brokers are targeting those aged between 17 and 25, selling policies that are either entirely fake, cancelled shortly after purchase, or invalid due to falsified details that lower the quoted premiums.

In recent years, ghost brokers – scammers that pose as middlemen between consumers and insurance firms – have increasingly moved online, making them harder to detect and prevent.

And changes to distribution channels are aiding their efforts – some 49% of young drivers surveyed by the FCA said they had bought insurance through social media or messaging apps, with 39% saying they were unconfident they could spot a fake policy.

Graeme Reynolds, director of insurance at the FCA, recommended that consumers be wary of deals that seem “too good to be true” and use the FCA’s Firm Checker service before purchasing through an intermediary.

Collaborative approach

Sara Costantini, regional director for the UK and Ireland at credit bureau CRIF, said: “Rising premiums in recent years are likely to have pushed younger drivers towards social media, purchasing what may look like good policies that come at cheaper costs.

“This is echoed in our own research, which finds that 43% of Gen Z feel the cost of insurance, combined with the recent increases in petrol and diesel costs due to the Middle East conflict, is making driving unaffordable.”

She continued: “Solving the issue of fake insurance policies will take a collaborative industry approach and insurers can do their bit by utilising the latest innovations in consumer profiling, open banking data and analytics to better understand customers.

“The result offers improved risk management, personalised pricing and more competitive policies, benefiting providers and consumers alike.”