A report from consumer group Which? highlights the stark cost difference faced by UK drivers who pay for car insurance monthly compared to an annual lump sum, with calls for the FCA to intervene.
A recent investigation by the consumer group Which? has indicated that motorists in the UK who opt for monthly car insurance payments are paying significantly more compared to those who pay annually. In September 2023, the discrepancy between monthly and yearly payments was on average £309, with motorists paying monthly fees totalling around £892 for the year, while those paying annually incurred an average cost of £583. Young drivers, who tend to face higher insurance charges, are particularly affected due to their likelihood of choosing monthly payments.
Which? has urged the Financial Conduct Authority (FCA) to look into this issue and create a strategy to combat the excess charges imposed on customers who make monthly payments. They highlighted that higher interest rates for monthly repayments unfairly penalize those who cannot afford to pay annually. Which?’s director of policy and advocacy, Rocio Concha, emphasized the importance of the FCA’s role in monitoring and addressing firms that overcharge their monthly payment customers.
The Association of British Insurers (ABI) has acknowledged the matter, noting that monthly instalments offer a way for motorists to budget and indicating ongoing discussions with the industry and the FCA to find solutions to help customers manage insurance costs effectively.
The FCA has confirmed their commitment to ensuring that products offer fair value and stated that they expect insurance companies to support customers experiencing financial hardships. Car insurance experts have also provided tips to minimize insurance costs, which include gathering multiple quotes, registering the correct address, selecting an appropriate policy, adding experienced drivers, using price comparison sites, and evaluating the most cost-efficient method for payment.
With motor insurance prices rising significantly over the past year, consumers find it crucial to explore all options to obtain the best car insurance deals available.
