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UK’s competition regulator to investigate motor insurance market

UK’s Office of the Fair Trading (OFT) has directed the Competition Commission to probe the private motor insurance market in the country over allegations of unfair activities being carried out by insurers on motorists.

Referring to a market study, OFT said it suspected consumers were being overcharged, while other market forces trying to prevent, restrict or disfigure competition.

The watchdog has also found that underwriters of drivers, responsible for an accident, had little control over the way repairs and replacement vehicles were provided to the ‘not-at-fault’ drivers.

OFT chief executive Clive Maxwell said, "The insurers of at-fault drivers appear to have little control over the bills they must pay, and this may be leading to higher costs for them and ultimately higher premiums for motorists."

"Having publicly consulted on our provisional decision, we are still of the view that there is no quick fix to these problems, and that a more in-depth investigation by the Competition Commission is therefore appropriate."

The Competition Commission has been given up to two years to submit its findings on the matter, after which remedial steps would be taken to deal with the situation.

The probe comes at a time when Royal Bank of Scotland’s Direct Line is being sold to gain European regulatory approval for the bailout package it received in the 2008 financial crisis.