RAC apologises to customers after breaking insurance renewal rules

Under rules introduced in April 2017, a renewal notice must clearly show how much you paid last year alongside the proposed renewal premium, and a prominent, clear and straightforward message encouraging you to shop around.

The Financial Conduct Authority (FCA) says the RAC is the latest firm to agree to contact customers after not meeting the rules, but that other firms are still failing to properly implement them - despite a warning in October.

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What are the rules and how did the RAC break them?

When a firm sends a general insurance renewal notice to a consumer they are required to:

• Say how much last year's premium was, so that it can be easily compared to the new premium.

• Encourage consumers to check their cover and shop around for the best deal.

• Identify consumers who have renewed four, or more, consecutive times, and add an extra message encouraging them to shop around.

The FCA said the RAC had failed to display both premiums, and a shopping around message as key information in its breakdown policy renewal documents.

As a result, the RAC will be writing to affected customers to apologise and offer them options of what steps to take next.

It's unclear what these options will be - we've asked the RAC if customers will be allowed to leave early or if they'll get money back - but if you feel you've lost out, you could ask to be compensated, or to be allowed to leave early and move to another insurer penalty-free.

'It's unacceptable that firms aren't being properly transparent'

Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA said: "It is simply unacceptable to see that some firms are still not being properly transparent with their customers a year on from the introduction of the rules.

"Firms failing to get this right may have led to consumers losing out as they do not have the right information to decide whether or not to shop around.

"We have already acted where we have seen particularly poor practice in firms and will continue to do so where we see firms not being transparent. As we said in October, we expect other firms to take notice of these issues, to look at what they are doing and to make sure they are getting it right."

An RAC spokesperson said: "While our breakdown policy renewal documentation did accurately contain all the necessary information, we recognise that some of the key information in our letters was not as prominently displayed as it should have been.

"We continue to be committed to giving members clear and fair information so they can make the right decision and are contacting those affected to ensure they are satisfied."