Which? Calls for Ban on Motor Insurance Monthly Fees
Consumer group Which? is demanding a ban on extra charges for monthly motor insurance payments after finding median APRs of 26.2%.
The consumer group Which? is calling for a ban on two-tier pricing in the United Kingdom motor insurance market, arguing that charging extra for monthly payment plans punishes drivers unable to pay annual policies upfront. A mystery shopping investigation of 30 providers conducted in August revealed a median annual percentage rate (APR) of 26.2% for premium finance, with some rates reaching as high as 53%.
Which? notes that these rates exceed the average credit card APR of 25.9%. The organization advocates for a total ban on these additional charges and requires insurers to offer monthly options without penalties to prevent consumers from being pushed into financial peril.
Industry bodies have defended the practice. The Association of British Insurers and the British Insurance Brokers' Association state that premium finance provides essential flexibility for households under financial pressure. They argue that the costs are proportionate to administrative burdens and the risks associated with delayed or missed payments. The British Insurance Brokers' Association further cited a Financial Conduct Authority report finding that broker market APRs are generally comparable to other forms of credit.
