LBG has also been fined £90m for breaching FCA rules
The discount issue was identified during the course of a separate FCA investigation into the language used in some nine million home insurance renewal letters, where customers were told they were getting a “competitive price”, but LBG hadn’t checked that this was accurate.
The FCA says that for the majority of customers, particularly those renewing more than once, their renewal quote was actually likely to have been higher than what they were already paying, higher than quotes for new customers and higher than the prices paid by those switching providers .
Financial firms are required by the FCA to communicate with customers in a way which is “clear, fair and not misleading”. The FCA concluded that LBG had failed to do this in its home insurance renewal letters – and has fined the banking group £90.7 m.
However, the watchdog says it hasn’t established whether individual customers would have behaved differently had the renewal letters been clear, fair and not misleading – so LBG won’t be required to pay any compensation to customers who got a renewal letter that claimed their premium was “competitive”.