Committee publication · Correspondence · 14 July 2026
Correspondence from Which? on consumer finance oral evidence follow-up, dated 6 July 2026
From: Treasury Committee
Inquiry: Consumer finance
Summary
Which? provides follow-up evidence to the Treasury Committee on consumer harms in insurance markets, focusing on the Financial Conduct Authority's handling of home and travel insurance complaints, premium finance APRs, and algorithmic price discrimination. The organization argues the FCA's interventions have been too narrow and shallow, leaving widespread harm unaddressed, and calls for legislative restrictions on non-risk factors in pricing and stronger regulatory action under the Consumer Duty.
Key findings
- Which? submitted a super-complaint to the FCA in September 2025 regarding consumer harm in home and travel insurance, the first in nine years, which the FCA accepted and launched five new investigations into.
- In a mystery shopping exercise of 15 travel insurers, a customer with severe bipolar disorder was rejected by 9 providers; where offered, premiums were 6 to 27 times higher than for a customer without mental health conditions.
- Insurance firms use over 400 pricing factors including non-risk data (web browser use, buying habits) to hyper-personalize prices and optimize for consumer propensity to purchase, which may constitute unfair discrimination under the Equality Act.
- The FCA's March 2026 premium finance report confirmed widespread poverty premium but failed to address it adequately: it negotiated reductions from only 3 of 10 high-APR firms reviewed, and June 2026 survey data shows providers now charge APRs just under the FCA's 30% threshold.
- Which? recommends legislation to ban non-risk factors in insurance pricing models and calls for the FCA to apply Consumer Duty guidance more proactively to force product improvements and reject claims rejection practices that breach consumer expectations.
Tone
CriticalTopics
Key actors
Which? (Consumers' Association), Financial Conduct Authority, Dame Meg Hillier MP, Money and Mental Health, House of Lords Financial Services Committee, National Association of Insurance Commissioners, Rocio Concha
Notable line
“… the FCA's intervention was too narrow to address a problem that our surveys consistently show is widespread across the market.”
Key Quotes
“This was timed at a critical juncture, as the Financial Services and Markets Bill introduces changes to the Financial Ombudsman Service that Which? believes will undermine the ability of consumers to obtain timely redress when they have an issue with a fi nancial product.”
“In an online mystery shopping exercise of 15 travel insurers, a 'customer' who has experienced severe bipolar disorder was turned down by 9 of the providers. When cover was o ff ered, the price quoted was 6 to 27 times higher than that quoted to a customer without a mental health problem.”
“Such sophisticated price discrimination has a degree of personalisation that may reduce overall consumer welfare and lead to harm for vulnerable consumers.”
“… the FCA's intervention was too narrow to address a problem that our surveys consistently show is widespread across the market. Though it reviewed 10 fi rms with high APRs, the FCA ultimately agreed reductions from just three insurers, re fl ecting a misplaced view that this problem only lies with a few bad apples.”
“Without penalties or compensation fi rms that have fallen short have little incentive to change practices proactively and customers will not receive redress for past harm.”
“We believe the Government should legislate to restrict the use of non-risk factors in insurance price modelling, including to prohibit fi rms from using a customer's likelihood of renewal or the likelihood of a consumer entering into negotiation when setting a price.”
Source · parliament.uk record ↗