Tesco Bank admits breach of competition rules

Tesco Bank has admitted to breaching UK competition rules related to its motor insurance.

In a letter to the bank, the Competition and Markets Authority (CMA) said that it had provided misleading information concerning the financial benefit of removing No Claims Bonus
Protection in renewal letters sent to 124,451 of its customers.

This was in breach of the UK watchdog’s Private Motor Insurance Market Investigation Order 2015, which provides measures to increase competition in the car insurance market and aims to reduce the cost of premiums for drivers. The cost of the protection was understated on average by around £10 for each customer.

Article 3 of the Order requires that the additional cost of the No Claims Bonus Protection is made clear to the customer.

Tesco Bank notified the CMA of this breach on 20 August 2021.

This breach took place between April 2020 and 14 September 2021.

“Had customers been properly advised by Tesco Bank about how much their insurance premium renewal would have reduced by removing No Claims Bonus Protection, they would have been better able to make an informed choice of whether or not to include it in their policy,” wrote the CMA.

In the letter, the authority said that the bank had taken steps to end the breach and put things right for impacted customers. The bank has ensured that the price reduction for removing No Claims Bonus Protection in renewal letters is now correct for the affected customers; is writing to all affected customers to offer a refund to those who would have removed No Claims Bonus Protection had they known the correct price reduction; has updated its systems to ensure a similar breach does not recur; and will, every time the price of its insurance changes, review a comparison of the commission rate on both sets of premiums with and without No Claims Bonus Protection to ensure these are the same.

Because Tesco Bank has taken action, the CMA said it is nor taking formal action against the company at this time.

“We apologise for this error, which we have now fixed," said Tesco Bank in a statement. "All existing customers who were impacted have been contacted with the option of a refund and the removal of their no claims bonus protection.

"However, the overwhelming majority of customers are choosing to retain their protection. In all cases there was no impact on the cover provided to our customers.”

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