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FCA publishes Notice of Undertaking by Policy Excess Insure Limited T/A Nova Direct

Policy Excess Insure Limited trading as Nova Direct (PEI) has given an undertaking, under the Consumer Rights Act 2015 (the CRA), making changes in relation to three terms in its insurer broker contract (for the sale of Motor Breakdown, Home Emergency, Home Appliance, Gadget, Bicycle and Travel Insurance policies) entered into from 1 October 2015. The FCA was concerned that the terms were likely to be considered unfair:

  • Continuous Payment Authority (CPA) term: which did not clearly reflect that the CPA is only in relation to collecting sums due for insurance premiums, as and when they fall due;
  • Cancellation term: which stated that consumers on automatically renewed policies would not be entitled to a refund of premium where they cancelled in advance of the policy start date. Further, that there would not be a 14-day cooling off period for policies which had automatically renewed; and
  • Automatic renewal term: which suggested to allow the firm to charge consumers with an administration fee for not renewing the policy.

As a consequence, PEI has:

  • Amended the CPA term so that it clearly specifies that the CPA permits the firm to charge the consumer only for insurance premiums due.
  • Agreed to amend the cancellation term to state that when a premium has been taken before the start date of the automatically renewed policy, then the premium will be refunded in full if the policy is subsequently cancelled by the consumer before the start date.
  • Agreed to amend the renewal term to remove the fee for consumers who choose not to automatically renew their policy.
  • Implemented an online “My Account” section which provides consumers with details of their policy and options to opt out of renewal of policies free of charge.
  • Amended the fees and charges page to remove any inconsistencies with the terms and conditions and to clearly reflect what fees and charges may apply, including when a charge may apply to renewed policies.
  • Confirmed their intention to redraft their terms and conditions with the assistance of a compliance firm.

Jasmine Zacher