* UK watchdog says clear case for intervention
* UK customers potentially overcharged by 200 mln pounds
* Industry body ABI says regulatory solution too broad
By Huw Jones
LONDON, March 11 Britain's financial watchdog is
proposing to crack down on the billion-pound market for "add on"
insurance that people often buy unknowingly when they purchase
items such as a car or a holiday.
Tuesday's proposals from the Financial Conduct Authority
(FCA) stem from an investigation launched last July which found
poor competition, low levels of claims and consumers potentially
being overcharged by up to 200 million pounds ($332.6 million) a
year for products that they may not need or even use.
"There's a clear case for us to intervene," Christopher
Woolard, director of policy, risk and research at the FCA, said
in a statement.
"Competition in this market is not working well and many
consumers are simply not getting value for money," Woolard
added. "Firms must start putting consumers first and stop seeing
them as pound signs."
The FCA, which was formally launched in April last year with
a remit to protect consumers, reviewed the experience of more
than 1,000 customers, using so-called behavioural research to
understand how sales tactics affect how people decide to buy and
how regulatory solutions should be shaped.
A quarter of consumers who bought "add on" insurance were
not aware they could buy the same product separately elsewhere.
The watchdog is proposing several changes, such as an
"aggressive cooling-off period" that forces a seller of add-on
insurance to ask the consumer if he or she still wants the
product in the days following the purchase.
Also, so-called pre-ticked boxes would be banned, meaning
consumers would have to actively choose to buy such insurance.
The Association of British Insurers (ABI), an industry body,
said the FCA's study was "surprisingly generic" given the
different products on offer.
"We hope and expect that the FCA will take a more market-
specific approach to this as their work on this develops," the
ABI said in a statement.
Woolard told a financial conference in London there was no
suggestion of mass mis-selling of products, but the same
insurance was usually cheaper when bought separately than as an
add-on to the product purchase.
The FCA has asked for comments from the industry on its
proposals by April 8.
($1 = 0.6013 British pounds)
(Editing by David Holmes)