As the Deputy is aware dual pricing is the practice of quoting two different price points in different markets for the same product or service. The “different markets” could be differences between new and existing customers or between different channels for accessing the quoted price (for example, via telephone versus online). I understand that it is a common practice across markets, not just insurance, and that consumers are already familiar with such dual pricing between new and existing customers, for example, in respect of utilities, such as energy and telecommunications services.
The Deputy should note that I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. That said, while the Consumer Protection Code 2012 does not explicitly reference dual pricing, the Central Bank has advised that the Code contains the general principle that regulated firms should act honestly, fairly and professionally in the best interests of their customers and the integrity of the market and make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer. The Central Bank expects that companies’ pricing practices are compliant with these principles and requirements. The Central Bank also expects that Boards should be aware of and be comfortable with their firms’ price policies.
I also understand that this is an issue that is being reviewed in the UK by the Financial Conduct Authority (FCA) following complaints by the UK National Association of Citizens Advice Bureaux, Citizens Advice. The FCA released an interim report on 4 October and it found that the home and motor insurance markets were not working well for all consumers in the UK. It also found that while a large number of people shop around, many loyal customers are not getting a good deal. The other key findings of the report noted that insurers often sell policies at a discount to new customers and increase premiums when customers renew, targeting increases at those less likely to switch; and that this appeared to impact consumers that showed at least one characteristic of vulnerability, such as having lower financial capability. While this is an interim report and it does not recommend any remedies at this stage, the FCA is due to publish its final report with possible remedies in Q1 2020.
Both Minister of State D’Arcy and I have concerns about the potential impact that dual pricing practices could have on certain vulnerable customers if they are being employed in Ireland, particularly in light of the interim findings in the UK on the matter. Prior to making any conclusions on this however, we need more detailed information about the extent and scale of the practice and what can be done to address it. Accordingly, I have asked the Central Bank for their views on this matter as a first step.