Consumer watchdog Which? wants the Financial Conduct Authority to prevent insurers charging excessively high interest rates to customers who pay monthly. Which? said that new research in this area had found one provider was charging an annual percentage rate of more than 45%. The research covered 49 car and 48 home insurers.

Which? said that among insurers that disclosed their rates, the average APR across car insurers was 22.33% and 20.23% across home insurers. It said these rates were comparable to credit card rates, despite the lending risk involved being much lower.

Some insurers did not disclose their rate and Which? carried out a mystery shopping exercise which revealed car insurance provider iGo4 charged an APR of 45.1%.

Rocio Concha, director of policy and advocacy at Which?, said: “Many customers who pay for home or car insurance monthly don’t do so out of choice, but financial necessity. That these same customers can end up paying over the odds compared to those who pay for cover annually is blatantly unfair.

“This is not the first time Which? has sounded the alarm over eye-watering levels of interest, yet excessively high rates persist.

“Car and home insurance policies aren’t nice-to-haves, but essential for motorists and homeowners. It’s high time for the FCA to take meaningful action against firms that continue to charge high rates and end this injustice.”