Opt-out selling of add-on insurance products banned from today
‘Opt-out selling’ is the practice of pre-selecting products for customers to buy which they then have to opt out of if they don’t want to proceed with the added extra.
Examples include separate baggage cover on a travel policy, accidental damage on a home insurance policy or a title insurance sold in addition to a mortgage.
Last year a market study by the Financial Conduct Authority (FCA) found consumers were overpaying for add-ons by as much as £200m per year and many were unaware that they’d signed up for them in the first place.
As a result, it decided to ban the practice of opt-out selling across general insurance products and financial services.
For consumers who’ve already bought products which included add-ons, the FCA will implement ‘transitional rules’ where firms will need to inform customers at renewal that the added product is optional and that they don’t need to take it out.
The FCA expects competition in the industry to increase as a result of the price transparency.