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FCA receives undertakings from Nova Direct

Link(s):Notice of Undertaking: Policy Excess Insure Limited T/A Nova Direct (fca.org.uk)

Context

The FCA has sought and received undertakings from Policy Excess Insure Limited (trading as Nova Direct) due to unfair terms and a term deemed to not be transparent.

Key points to note

The FCA’s concerns relate to:

  • Continuous Payment Authority (CPA): a term stated that if consumers authorised a CPA “…you permit us to charge any sums due to your card and to take payments as and when they fall due”.
  • The FCA was concerned that, as drafted, the term was likely to be considered unfair because it had the potential to give the firm the ability to charge consumers unspecified amounts at the firm’s discretion.
  • Cancellation: A second term stated that if consumers chose to cancel their automatically renewed policies before the start date, then the premium paid would not be refunded.
    • The FCA was concerned that this term was likely to be considered unfair because as drafted, it allowed the firm to retain premiums paid by consumers for a service they would not receive. It was also concerned that the term was likely to be insufficiently transparent as it did not reflect how the firm acted in practice. In addition, the term did not allow a 14-day cooling off period for policies which had automatically renewed which, is not in line with ICOBS rules.
  • Automatic renewals: A third term allowed the firm to charge a fee to consumers who chose not to renew the policy.
    • The FCA’s concern was that this term is likely to be considered unfair as consumers would not expect to pay a fee to exit their contracts at the end of their policy. They should also not have to pay a fee to avoid being entered into a new contract, especially as this was a process consumers were automatically enrolled into, when purchasing a policy.

Next actions

None – for information and awareness.