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HOME and car insurance companies face being banned from charging customers more when they renew their policy.
The city watchdog argued that existing customers shouldn’t pay more for their insurance than a new customer.
Under the proposals from the Financial Conduct Authority (FCA), businesses would still be able to set prices for new customers.
But companies wouldn’t be allowed to increase prices for new customers unless their risk level increases, for example, if a motorist has an accident.
It comes after the FCA found that 6million policyholders could save a collective £1.2billion a year if they paid the average premium for their risk.
This includes one in three people who are potentially vulnerable, for example because they are less financially savvy.
How to compare home and car insurance
PAYING your car and home insurance can be a stressful time for drivers.
It’s a legal requirement to have car insurance and going without it could land you with a £300 fine, six penalty points on your licence and even a criminal conviction.
Home insurance, meanwhile, is often a requirement to get a mortgage.
But before you automatically renew with your current provider, make sure you compare prices to ensure you’re on the best deal.
There are dozens of reputable websites where you can check prices, including Compare the Market and Go Compare.
Once you’re done, the websites will then show you the quotes you can get some different providers.
If you find a better price, go back to your insurer and tell them what’s being offered elsewhere.
While no means a guarantee way to lower the price they’re offering you, haggling doesn’t cost a penny and can prove successful.
If they can’t lower their price, then you can leave them and go with the cheaper deal.
Also remember to check insurance prices directly with Aviva and Direct Line as these insurers don’t feature on comparison websites.
Once you’ve found your perfect deal, do a check on Quidco and TopCashback to see if you can also earn cashback on top.
The watchdog said companies are more likely to increase prices for loyal customers who don’t switch.
The FCA estimates that its proposals, which were first announced in October 2019, will save consumers £3.7 billion over 10 years.
Insurance companies now have until January 25, 2021, to get back to the FCA with any proposals.
The watchdog then plans on enforcing the new rules next year.
FCA interim chief executive Christopher Woolard said the measure would “put an end to the very high prices paid by some long-standing customers”.
He added: “We are consulting on a radical package that would ensure firms cannot charge renewing customers more than new customers in future.
“The package would also ensure that firms focus on providing fair value to all their customers. We welcome feedback on the proposals.”
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