Context
Which? is calling on the FCA to take urgent action to prevent insurers from charging monthly payment customers excessively high amounts of interest, as new research finds one provider with a premium finance APR of more than 45%.
Key points to note and next actions
Which? researchers asked 49 car and 48 home insurers how much interest they charged customers to pay for cover monthly and found that several firms are charging what Which? has described as “excessively high levels of interest”.
However, among insurers that disclosed their rates, the average APR across car insurers was 22.33%, and 20.23% across home insurers. These rates are comparable to borrowing costs for credit cards. This publication, though, will no doubt renew the Regulator’s interest in premium finance costs – but the focus may shift towards insurers and away from insurance intermediaries.