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Some paying 20 per cent more for car insurance
May 21 04
The Liberal Democrat MP Tom Brake has criticised the 20 per cent charge levied at customers who pay for their car insurance in monthly instalments.
It appears some companies charge extra to those who opt to make direct debit payments.
Mr Brake believes customers choose this option as they cannot afford the lump sum, and as such this practice is "hitting hardest those who can afford it least".
Speaking on BBC Radio Four's 'You and Yours', he called the charge "unacceptable", saying there appears to be no hard-and-fast rule, and different insurance companies give different reasons for the charge.
"Some people are saying it's down to bad debts, others are saying it's down to administration charges," he said. However, he made clear that: "there might be an initial admin charge that's required to set up the direct debit, but once it's set up it is running thereafter."
He is one of 30 MPs who have signed a Commons motion calling for the Government to carry out a full investigation. Mr Brake said: "We need to raise awareness of the issue, we need to encourage consumers to look at the small print. Also I think we need to put more pressure on the insurance companies."
Speaking on the same programme, Robert O'May, car insurance manager for Sainsbury's Bank, confirmed that his firm charged "in the region of about 20 per cent" but he also claimed that some companies charged up to 40 per cent.
Mr Brake is to take the matter up with the Office of Fair Trading, hoping they will look into it.
© DeHavilland Information Services plc, 1998-2003
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