FSA Regulation

From January 2005, all car insurance companies must be regulated by the Financial Services Authority (FSA). The FSA is an independent body given the task of maintaining confidence in, and promoting understanding of, the UK's financial system; protecting consumers; and reducing financial crime within businesses. In terms of car insurance they set out rules and regulations that are designed to ensure that your car insurance provider is open and honest about your policy.

The FSA aims to protect your rights when you sign a legally binding car insurance contract. You can cancel your contract without penalty in each of the following circumstances:

 

  • when your policy term comes to an end
  • if you sell your car, or it is written-off, or stolen and not recovered
  • during the fourteen day cooling-off period (see Cancellation)

 

Other areas where the FSA may protect your rights are:

 

  • Complaints
  • False Advertising
  • Unfair Contract Terms

 

False Advertising
False advertising is the name given to an advertisement that is misleading, untrue and/or deceptive. The FSA aims to ensure that your car insurance company will only promote their products using clear and fair advertisements, whether they are: television, radio, newspapers, direct mail, text messages, emails or websites. The FSA can: ask a car insurance company to change or withdraw the offending advert; ask them to write to affected customers and offer compensation; or give them a warning and/or a fine.

Unfair Contract Terms
The FSA can regulate any contract made with your car insurance provider, as long as you did not individually negotiate the terms with your insurer. An unfair contract term includes (but is not limited to) where:

 

  • the insurer is able to change any term of the contract without giving you necessary notice or giving a reason why
  • it would bind you to hidden terms
  • your legal rights are negated or limited
  • for not complying to the terms of the contract, you are charged a large penalty, that is disproportionate to the cost incurred by the insurer to rectify your non-compliance