The UK Financial Conduct Authority (FCA) is considering banning what it calls “dual pricing” – where insurers charge loyal customers more than they charge new ones.

The FCA’s interim report into home and motor insurance pricing concludes millions of people are paying £1.2 billion ($2.18 billion) a year more than they should.

The report suggests “banning or restricting practices like raising prices for consumers who renew year on year or requiring firms to automatically move consumers to cheaper equivalent deals”.

The FCA says many of those targeted for higher premiums are vulnerable, and insurers are not open enough about how premiums are calculated.

“This market is not working well for all consumers,” FCA Executive Director of Strategy and Competition Christopher Woolard said.

“While a large number of people shop around, many loyal customers are not getting a good deal. We believe this affects about 6 million consumers.

“We have set out a package of potential remedies to ensure these markets are truly competitive and address the problems we have uncovered. We expect the industry to work with us as we do so.”

Further consultation will take place, with the FCA expecting to publish a final report next year.

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