CMA unveils game-changing plans in a huge crackdown on insurance firms ‘ripping off’ customers
The Competition and Markets Authority (CMA) has today unveiled a massive crackdown on insurance that threatens to shake up the industry like never before.
The CMA has found ’damaging practices by firms which exploit unsuspecting customers’ in relation to pricing loyal customers more aggressively than new ones.
The CMA’s package of reforms are being put forward for the government and regulators to consider for urgent action.
They affect customers across a number of services such as mobile, broadband and mortgages, but insurance is one of the biggest targets for reform.
Insurers and brokers were singled out particularly by the CMA as showing some of the very worst behaviours.
The reforms include:
- Targeted price caps to protect the most vulnerable hit by loyalty penalties. A specific CMA recommendation against insurers and brokers has been made to the FCA.
- Naming and shaming firms that hit their customers with loyalty penalties by getting them to openly publish details and data on their unfair practices
- Looking into beefing up consumer law to make it much easier for people to leave contracts
The CMA, which was responding to the super complaint from Citizens Advice, was particularly damning of insurers and brokers where there ’is evidence of firms continually raising prices in this market’.
The unprecedented scale of the CMA’s intervention means there is now a high chance the insurance industry will face pricing intervention as part of a wide-ranging package of reforms.
The CMA is likely to concentrate on personal lines, but the wide-ranging nature of the crackdown means brokers selling commercial insurance could well end up in the firing line, especially those with schemes.
The CMA recommendations come just weeks after the FCA published its own findings, which revealed atrocious levels of behaviour from insurers and personal lines brokers.
CMA chief executive Andrea Coscelli said: ”Our work has uncovered a range of problems which leave people feeling ripped off, let down and frustrated.
”They shouldn’t have to be constantly ‘on guard’, spending hours searching for or negotiating a good deal, to avoid being trapped into bad value contracts or falling victim to stealth price rises.
”Millions of loyal or vulnerable customers are being taken advantage of each year by firms – and end up paying much more than they should do. This must come to an end.
”That’s why we have today recommended a robust package of reforms. There must be a step change to protect the people being hardest hit, including targeted price caps where necessary.
”Together the CMA, regulators and government must act more promptly and powerfully to hold firms to account, stop them exploiting their customers and restore people’s trust in markets.”
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