Watchdog to crack down on insurers and brokers charging punitive ‘renewal fees’
Insurers and brokers are facing a crackdown on punitive ‘renewal fees’.
Some customers must pay the add-on charges when renewing their policy. However, firms may be forced to slash or abolish these fees by the end of 2021.
New rules from the Financial Conduct Authority (FCA) will stop insurers reserving their best deals for new customers.
Crackdown: From January tough new rules enforced by the Financial Conduct Authority will prevent insurers reserving their cheapest deals for new customers
But the watchdog is concerned firms may use extra charges such as renewal fees to regain losses.
Mike Jones was quoted a £20 renewal fee by his home insurer Rias. The retired engineer and his wife Avis, 57, saw the charge in May.
The insurer also hiked the premium for their three-bedroom house in Yorkshire by 8 per cent to £264.
A Rias spokesman says the £20 fee covers the costs of setting up the policy.
He adds: ‘The cost of setting up a new policy is included in the overall price and we are reviewing this as we implement the new FCA requirements.’