Endsleigh tripled cancellation charge, while two Direct Line brands doubled theirs
Consumer association Which? has criticised the UK’s top motor insurance brands as part of a new campaign against what it calls “sneaky fees and charges” in the financial services industry.
But the ABI has hit back, saying insurers are “not interested” in hiding charges from customers.
Which? said almost half of the population had paid a fee or charge on a financial product or service in the last year and 68% of them agree that companies use separate fees or charges to “trick” people into thinking that the cost of their product or service is lower than it is.
Which? said its findings were backed up by a separate investigation into the car insurance market, which found that fees have risen while premiums have been falling.
The association said nearly half of the 28 car insurance providers it looked at have increased administration or cancellation fees since its previous survey three years ago.
The biggest increase Which? found was at motor broker Endsleigh, which it said had tripled its cancellation charge to £75. Direct Line Group brands Churchill and Privilege doubled their cancellation fees, the association said.
In addition, Which? said six companies – Churchill, LV=,RSA’s More Than brand, Nationwide, Privilege and Saga – have increased the fees they charge to make changes to policies by at least a half.
Furthermore, Which said eight companies had introduced new fees and charges. It said the AA and Hastings Direct charge over £20 just to set up policies and Direct Line, NatWest, Privilege and Sainsbury’s now charge for duplicate documents if customers want to receive them in the post.
Which? executive director Richard Lloyd said: “Consumers are fed up with being hit with unexpected, additional costs for financial products that lead to them paying more than they bargained for. These fees can be hard to avoid, and people often don’t know what they’re really paying for.”
But ABI director of regulation Hugh Savill said: “Insurers are not interested in hiding any charges from their customers, and follow regulatory requirements so that any additional charges are clearly set out.
“Insurers have also recently written to the regulator asking for reforms to ensure more customer-friendly information on renewal pricing.
“The motor insurance market is very competitive, with the average private motor insurance premium having fallen by 14% since the start of 2012.”
He added: “Insurers agree that it is important customers are fully aware of any administration and cancellation charges when comparing premiums and the cover offered by providers, and this is a responsibility for all those who sell insurance, including comparison websites, and brokers as well as the insurers themselves.”