The Financial Conduct Authority published its final report on the premium finance market, finding that the cost of paying monthly for insurance has fallen, delivering estimated consumer savings of around GBP 157m a year. It said it is not planning market-wide changes such as a price cap, but expects firms to ensure premium finance offers fair value under the Consumer Duty. Over half the firms reviewed lowered the cost of premium finance and interest rates for premium finance have fallen by an average 4.1 percentage points since 2022, saving consumers around GBP 8 a year on a typical motor policy and GBP 3 on a typical home policy. Firms the FCA identified as at highest risk of not providing fair value reduced annual percentage rates by 7 percentage points on average after direct engagement, saving around GBP 14 a year on a typical motor policy and GBP 4 on a typical home policy. Nearly half of motor and home insurance policies in 2023, about 23 million, were paid monthly. The FCA will continue to monitor fair value and said it will act where firms fall short of expectations. To support firms’ compliance, it has shared examples of good and poor practice seen across the premium finance market and confirmed it will not mandate that premium finance must be provided without interest.
Financial Conduct Authority 2026-02-03
Financial Conduct Authority finds premium finance cost cuts saving consumers around GBP 157m a year and rules out a price cap
The Financial Conduct Authority's final report on the premium finance market reveals a reduction in the cost of monthly insurance payments, saving consumers approximately GBP 157 million annually. While no market-wide changes like a price cap are planned, the FCA expects firms to ensure fair value under the Consumer Duty and will continue monitoring compliance, having shared examples of good and poor practices.