Pre-ticked boxes for insurance add-ons when purchasing services like a holiday could be banned by the Financial Conduct Authority.
The FCA claims the £1bn insurance add-on market is overcharging customers for products they may not need or use. An investigation in July 2013 by the FCA found poor competition at point of sale and low levels of claims. There was also a lack of information which prevented customers from making informed choices regarding the products.
25% of customers who bought insurance as an add-on were not aware that they could buy it separately elsewhere. 38% said they had not planned to buy the add-on before the purchase. 69% of those who bought it could not accurately remember how much they paid three to four months later, with 19% forgetting they had even bought it.
Christopher Woolard, director of policy, risk and research at the FCA, said: “There’s a clear case for us to intervene. Competition in this market is not working well and many consumers are simply not getting value for money.
“Firms must start putting consumers first and stop seeing them as pound signs.”
The FCA is proposing banning pre-ticked boxes to ensure consumers actively opt in to buy, and not have to choose to opt out. It will also require companies to publish claim ratios to highlight low-value products, which it hopes will encourage better quality products for consumers.