Insights: Market Study into the Provision of Premium Finance

Summary
This FCA market study explores the provision of premium finance, focusing on motor and home insurance policies. The study aims to assess whether the market offers fair value to consumers and how effectively competition functions. With rising insurance premiums, the demand for premium finance has increased, particularly among vulnerable customers. The FCA seeks to identify any regulatory or structural issues and potential remedies to ensure good consumer outcomes under the Consumer Duty framework.
Key Take Aways

Consumer Usage: Over 20 million UK adults use premium finance, with widespread usage in motor and home insurance.
High Costs: APRs for premium finance can reach 30%, raising concerns about affordability and fair value.
Vulnerability Focus: Vulnerable consumers, who often rely on premium finance, are more exposed to high costs and poor value products.
Competition Concerns: The market may suffer from weak competition, limited customer decision-making power, and misaligned...