When did I agree to that!? Hidden add-on insurance policies that need 'unticking' could be banned by watchdog
Box of tricks: Consumers can sign up to insurance without knowing it.
Accidentally agreeing to purchase extra insurance when you take a loan or car cover could be a thing of the past under proposals put forward by the City watchdog today.
The Financial Conduct Authority will consult of changes that mean 'opt-out selling' - which involves having to untick a box in order not to buy an add-on - will be banned.
This would include legal expenses sold with home insurance, breakdown or key cover sold alongside motor insurance, or protection cover for a mortgage or credit card.
The Financial Conduct Authority said a study last year found the practice often resulted in consumers purchasing an insurance product they did not need.
Some consumers were not even aware that they had bought an add-on.
Christopher Woolard, the FCA's director of strategy and competition, said: 'This is about ensuring consumers can make the right decision on what add-on insurance they do or don't need.
'Forgetting to untick a box at the end of a purchase is not making an informed choice.
'We are all familiar with having to double check whether or not we have accidentally agreed to buy an add-on insurance product when buying car insurance or tickets online, for example.'
He said the new plans would mean fewer consumers 'end up with products they didn't want or don't even know they own'.
Opt-out selling was a key compnent to the widespread mis-selling of payment protection insurance on credit cards and loans. Since the scandal emerged, major bank and building societies have overhauled their methods so that opt-out selling is rarely used.
Regulators will consult with industry on its plans which also include introducing guidance for firms so they can give consumers information about add-ons at the right time in the sales process.
The FCA also recommends that companies give the annual price of add-ons rather than relying on monthly figures, so that the overall price to be paid can easily be understood. Its consultation closes on June 25.
A ban to the practice could harm the insurers who benefit from shoppers being opted into their porducts.
Shore Capital analyst Eamonn Flanagan said: 'These changes are likely to reduce the penetration rates and conversion rates of such products, which are a significant element of the total profitability of the personal lines insurers.'
He reiterated a 'sell' recommendation on Admiral, Direct Line and esure.
Most watched Money videos
- German car giant BMW has released the X2 and it has gone electric!
- Dacia Spring is Britain's cheapest EV at under £15,000
- Would you retire abroad for cheaper living costs?
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- Iconic Dodge Charger goes electric as company unveils its Daytona
- Aston Martin unveils new Vantage sports car capable of 202mph
- Pair of rare 1980s Ford Sierra RS500 Coswotths head to auction
- Mini unveil an electrified version of their popular Countryman
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Competition watchdog clears Aviva's £460m acquisition of...
- Legal firm representing St James's Place customers to...
- Bidding war erupts for UK telecoms firm Spirent as...
- Superdry founder Julian Dunkerton ends his pursuit of the...
- No one should expect sympathy when the crypto bubble...
- Insurers are STILL stinging drivers by undervaluing...
- My friends say I'm a shopaholic but I'm 34, single and...
- Celebrity skincare favourites help boost sales at Boots...
- MARKET REPORT: North Sea oil producer Enquest posts loss...
- Disgraced crypto tycoon Sam Bankman-Fried sentenced to 25...
- AO World shares surge as online retailer electronics...
- Cost of Baltimore bridge disaster will run into multi...
- Interest rate cuts still 'a long way off' despite falling...
- Nearly half of young people don't realise buy now, pay...
- The turning of the tide for luxury e-commerce? Shoppers...
- Dividend hero SAINT's manager on the best shares for...
- My blood boils when I hear critics say Waspi women should...
- William Hill owner 888 agrees to flog assets as it...