’For millions to face excessive charges due to their circumstances is unfair – and exactly the kind of issue the FCA should address,’ says director
Some motor and home insurers are still charging high interest rates for consumers paying monthly, new research by Which? has found.
Published today (18 March 2025), the data showed that the average annual percentage rate (APR) stood at 22.84% for car insurers and 21.59% for home insurers.
The consumer champion asked 52 car 46 home insurers what rates of interest they charged customers to pay for cover monthly to work out an average.
However, Which? said a number of providers charge “significantly more”. For example, it said that two firms were found to have charged between 30.72% and 34.08%.
Which? researchers also conducted a mystery shop of car insurance providers, obtaining quotes as a 40-year-old Vauxhall Corsa driver based in south London. All but one of the brands that quoted had APRs higher than 25%.
Rocio Concha, Which? director of policy and advocacy, said: “People often don’t pay for car and home insurance in monthly instalments out of choice, but financial necessity.
“For millions to be hit with excessive extra charges due to their circumstances seems like kicking customers when they are down – and this is exactly the kind of unfairness the regulator should have in its sights.”
FCA study
Which? previously raised concerns about the high monthly interest rates charged by motor and home insurers in September 2024. Then, the average APRs were found to be 22.33% for motor insurance and 19.83% for home insurance.
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The consumer champion said it ”remains concerned that too many insurers are charging unjustifiably high rates of interest to customers who can afford them the least”.
In turn, Which? backs the FCA’s decision to conduct a market study into this pricing practice, with its findings expected in summer.
The FCA launched the study in October 2024 due to having concerns that premium finance may not be providing fair value.
Which? said the regulator ”should not hesitate to take action against firms found to be falling short of their regulatory requirements”.
Concha added: ”As part of its market study, the regulator must get to the bottom of what fair rates of interest are by gathering information from firms on profit margins and commission levels – and ultimately be prepared to take tough action against firms continuing to charge excessively high rates of interest on monthly repayments.”
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