Committee publication · Correspondence · 14 July 2026
Correspondence from Money Advice Scotland to Chair on consumer finance follow-up, dated 6 July 2026
From: Treasury Committee
Inquiry: Consumer finance
Summary
Money Advice Scotland's follow-up letter to the Treasury Committee outlines concerns about insurance affordability and accessibility, particularly for vulnerable consumer groups. The organisation urges regulatory scrutiny of AI-driven pricing, supports exploration of basic insurance products, and emphasises that regulatory success should be judged by whether consumers can access appropriate cover, not market indicators alone.
Key findings
- Insurance affordability is critical: rising costs create a poverty premium where those most needing protection are least able to afford it, with vulnerable groups including low-income households, younger drivers, and those with health conditions increasingly unable to obtain cover.
- AI and hyper-personalisation in underwriting pose dual risks: while improving fraud detection, granular pricing risks excluding consumers through unaffordable premiums and reducing transparency; firms must demonstrate governance and testing to prevent bias and discrimination.
- Monthly premium finance arrangements charge significantly more than annual premiums, compounding poverty premium impacts; regulatory scrutiny of this practice is warranted.
- FCA's loyalty penalty intervention was welcomed, but affordability remains the core concern; regulatory success should be measured by consumer access to appropriate cover and fair treatment, not pricing metrics alone.
- Basic insurance products (modelled on basic bank accounts) could improve financial inclusion in specific markets like home contents or motor insurance, but require careful design to provide meaningful protection and avoid creating two-tier markets.
Tone
CriticalTopics
financial-inclusioninsurance-regulationconsumer-protectionartificial-intelligencepoverty-premium
Key actors
Money Advice Scotland, Dame Meg Hillier MP, Financial Conduct Authority (FCA), Treasury Select Committee
Notable line
“… rising premiums risk creating a situation where those with the greatest need for protection are least able to obtain it.”
Key Quotes
“… rising premiums risk creating a situation where those with the greatest need for protection are least able to obtain it.”
“Money Advice Scotland is particularly concerned that highly personalised pricing may reduce the principle of risk pooling that underpins insurance.”
“The success of regulatory intervention should be judged not only by market indicators but by whether consumers can continue to access appropriate insurance, understand the products they purchase, and receive fair treatment when making a claim.”
“A similar approach could be considered for essential insurance products where access has become increasingly difficult.”
Source · parliament.uk record ↗