Customers given inaccurate auto-renewal letters by insurance firm Admiral will be able to cancel policies without penalty, following a Financial Conduct Authority investigation a month after MoneySavingExpert.com first revealed the errors.
The Financial Conduct Authority (FCA) today announced that the insurance heavyweight broke industry rules, introduced in April, which require firms to clearly show what customers paid last year alongside their proposed renewal premium.
The insurer sent renewal documents to customers that stated last year's quoted premium, before discounts were applied, rather than what the customer actually paid.
Admiral has agreed with the FCA to contact affected customers, who renewed policies after 1 April 2017, and says it's still working to fix the issue, so it's unclear when these letters stopped being sent, if they have been.
Any affected customers who want to go to another insurer as a result of receiving the inaccurate letters will be able to cancel without penalty and have their premium refunded.
The message from MoneySavingExpert has always been that you should NEVER automatically renew with the same insurance company, as the best deals are often for new customers. See our Cheap Car Insurance and Cheap Home Insurance guides for full help.
MoneySaver spotted his premium had risen by nearly 60%
MSE first reported on this issue in May, after speaking to MoneySaver John Cain, of the Isle of Man. He'd been told that his premium the previous year had been £231 and was set to auto-renew before he spotted a disclaimer that this figure did not include discounts.
It turned out the actual amount John had paid was just £162 – meaning his renewal premium of £257 had been increased by more than he realised.
When we contacted Admiral about John's case in May, the insurer said the reason the letter sent to Mr Cain displayed the original quote and not the discounted premium was due to changes within its IT system.
It admitted "several thousand" could have still been on the old IT system which sent the inaccurate letters.
A spokesperson for the insurer told us in May: "For this reason we have added a sentence to our disclosure wording on the renewal notice to highlight the fact that discounts may not be included. We believe our renewal notifications are within line with FCA guidelines."
But the FCA today announced that it disagrees and has said Admiral will now make changes to ensure it is fully compliant with its rules.
I'm an Admiral customer – what should I do?
Admiral has told MSE it is contacting affected customers in writing. But if you want to act now:
- Dig out your renewal letter – If you're an Admiral customer and renewed after 1 April 2017, find your renewal letter and check the 'last year's premium' you were quoted, against the price you actually paid.
- If you think you've been affected, contact Admiral – If you believe the quoted 'last year's premium' figure was higher than you actually paid, and you renewed your cover based on this inaccuracy, get in touch with Admiral on 0333 222 6715 for single-car policies, 0333 222 6716 for multi-car and 0333 220 2016 for home insurance policies.
- Check if you can swap to a cheaper policy – If you've confirmed you can switch without penalty, use our step-by-step Car Insurance and Home Insurance guides to check if you can find cheaper insurance.
'Vital that insurers give customers the right information'
Jonathan Davidson, executive director of supervision, retail and authorisations at the FCA, said: "It is vital that insurers give customers the right information so they can easily compare premiums and make a choice whether to shop around.
"When introducing these measures, the FCA was clear that firms should be ready from April 2017. We will continue to keep a close eye on the industry's response to ensure firms are complying with the new rules and will take action where necessary."
The regulator is now checking whether other firms might be breaking the rules, after seeing what it describes as "concerning examples".
A spokesperson for Admiral apologised and said: "We are amending the way in which these customers are able to compare the price of the insurance policy being offered at renewal with what they paid the previous year. We are getting in touch with affected customers to ensure they are fully satisfied. Admiral is committed to offering fair and transparent pricing to all customers."
When asked if the IT system that Admiral said was to blame for inaccurate renewal notices being sent to customers had been fixed, a spokesperson said: "We are working hard to rectify this issue as soon as possible."
We are looking into reports by MoneySavers who say they have received inaccurate renewal notices from other insurers. We want to hear from you if you've been affected.