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.
The watchdog said companies are more likely to increase prices for loyal customers who don’t switch.
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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