Consumer watchdog Which? has said some insurers are still charging annual percentage rates of more than 30% to customers who pay for their cover on a monthly basis. It questioned 52 motor insurers and 46 home insurers. The average APR for motor insurers was 22.84% and 21.59% for home insurers, although Which? found examples in both markets of APRs above 30%.

Rocio Concha, director of policy and advocacy at Which?, said: “People often don’t pay for car and home insurance in monthly instalments out of choice, but financial necessity. For millions to be hit with excessive extra charges due to their circumstances seems like kicking customers when they are down - and this is exactly the kind of unfairness the regulator should have in its sights.

“Encouragingly, the FCA is now looking into this issue. As part of its market study, the regulator must get to the bottom of what fair rates of interest are by gathering information from firms on profit margins and commission levels - and ultimately be prepared to take tough action against firms continuing to charge excessively high rates of interest on monthly repayments.”