CMA Private Motor Order – Breachess!

|Date
|31st January 2025

If you sell private motor policies to your clients, you’ll know the deadline for submitting the No Claims Discount information to the CMA is 1st February 2025. The submission is required to ensure transparency and fairness in how No Claims Discount applies to a policy and is communicated to consumers, with the aim of preventing misleading practices, such as incorrect NCD calculations or unfair reductions in discounts for customers.

Your annual submission is a good time to review your processes to check that you are still providing customers with appropriate No Claims Discount information, usually available in a clearly laid out table from the insurer. For example, checking the letters to see that the information is being generated correctly and included in correspondence to the customer.

 

Most brokers rely on their systems generating the information automatically, but as we see below, this is not always the case. In July 2024, Direct Line notified the CMA of a breach which resulted in their failing to provide more than 300 customers with the No Claims Bonus Protection Information and Statement between June 2023 and January 2024. Direct Line said that this had been caused by their systems adding No Claims Bonus Protection by error to customers’ policies, without their permission. The customers were not made aware of this until after the No Claims Bonus Protection had been applied to their policies. 

In their letter to Direct Line in December 2024, the CMA confirmed that they would not be taking any formal enforcement action due to the corrective steps taken by Direct Line, which included:

  • Ending the breach
  • Taking steps to prevent a recurrence
  • Compensating the customers involved (thought to be about £20,000)
  • Carrying out systems test to prevent unwanted additions being included in policies
  • Interrogating their systems to check customer data for existing errors
 
Other notable breaches of the Private Motor Order include:
 
  • Swinton Group Limited: Between January 2023 and December 2023, more than 5,000 customers did not receive the required No Claims Bonus Protection Information and Statement 
  • Hastings Insurance Services Limited: For an 8-month period in 2023, approximately 2,500 customers did not receive the NCB Protection Information and Statement when buying online
  • Somerset Bridge Group Limited: Over a period of up to five years, approximately 225,000 customers  were affected due to failures in providing correct pricing and required information regarding NCB Protection. 
  • Tesco Bank: Between April 2020 and September 2021, 124,451 customers were not informed about the price of NCB Protection as required by the Order.
 
The CMA typically seeks to ensure compliance through corrective actions, but depending on the nature and severity, a breach could carry penalties including:
 
  • Enforcement Action – The CMA can investigate and take action against non-compliant brokers.
  • Fines – The CMA has the power to impose financial penalties for non-compliance.
  • Court Orders – The CMA can seek a court order requiring compliance with the Order.
  • Contractual or Regulatory Consequences – Brokers regulated by the Financial Conduct Authority (FCA) may also face additional sanctions from the FCA if non-compliance leads to breaches of other regulatory requirements.
 
It’s also important to consider the damage to your reputation and credibility in the industry if you are found to be in breach of the order.
 
So, remember to make sure you are providing the customer with sufficient information about No Claims Bonus to make an informed decision, including providing the NCB information provided by the insurer and the cost of protecting their NCB.