Direct Line insurance has announced that it will be providing £30million in compensation to its customers who were overcharged. The payout will be given to home and car policyholders who renewed their policies in the past 18 months and were charged more than new customers. This breach of regulations introduced at the beginning of 2022 will lead to Direct Line compensating affected customers.

Breaking the rules

In 2022, the Financial Conduct Authority implemented a rule stating that customers renewing their policies must not be quoted higher prices than new customers. However, an error in Direct Line's implementation of these rules led to some customers being charged prices that did not comply with the regulations. Direct Line has acknowledged this mistake and is working to rectify the issue.

Uncertain impact

It is currently unknown how many customers were affected by this error or the amount of compensation they will receive. However, Direct Line has stated that the compensation is likely to be in fairly small amounts. The company is in the process of identifying the impacted customers and will reach out to them directly to apologize and refund any owed money.

Industry concerns

This incident has raised concerns within the insurance industry. Sam Richardson, deputy editor of Which? Money, expressed shock that loyal customers were being hit with additional costs. This comes at a time when car and home insurance premiums are already skyrocketing, highlighting the importance of holding insurers accountable and protecting customer interests.

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