Ms Derville Rowland:

As a first phase, we will establish the nature and scale of the practices of differential pricing. I would like to observe that this has been ongoing for a long time, as the Deputy will know, not only in the insurance industry but in a lot of industries. The FCA has concluded, and we are of the conclusion, that it is not necessarily a negative thing because there can be significant winners and losers and this is a complicated area where some people can get a good price for them if they switch provider and that can be a good thing. Also, we need to establish the prevalence and the impact of this practice in the industry to see what the impacts on groups of customers can be. We would expect to acquire detailed information from a relevant group of insurers. In our view, in excess of 70% of the market for motor and home insurance would have to be covered with a representation of the main insurance providers and some of the key brokers because they will all have complex business models and they will be selling different types of insurance through different insurance channels. We will have to look at their pricing strategies and we will have to look at how that is applied in the business, how it is applied in the board, how they deploy it through their system, how they satisfy themselves they are in compliance with our expectations for regulatory requirement and how it is deployed. That is not in one document. It is in many different places and our experience with firms is this can be iterative. In the end, what we will have to do to get a line of sight on the decision factors and decision points they are using, is to do walk-throughs of the business models and see how they apply through that.

This is a significant, wide and detailed piece of work, the aim of which is to identify the decision factors they are using and the groups of customers that are affected. That will lead us into phase 2, which is the detailed granular data analytical request about the groups of customers, the characteristic points and those things that can only be formulated after we have established the prevalence, practices and impacts in place in phase 1. There is another part to that work if the Deputy would like me to go on.