Tesco Bank has been ordered pay refunds to hundreds of car insurance customers after it sent out renewal letters incorrectly stating the price of no claims bonus protection.
No claims bonus (NCB) protection is additional cover that drivers can purchase which protects their no claims discount in the event of an accident.
From April 2020 to September 2021, more than 120,000 Tesco Bank customers were misled into thinking their NCB protection was cheaper than it actually was – by roughly £10 – after they received inaccurate renewal letters.
These customers were then asked if they wanted to get a refund and lose their NCB, or to keep the NCB without a refund.
Most have chosen to keep it, but hundreds are still getting the refund.
A CMA spokesperson said: “This error meant that motorists were unable to make a fully informed decision as to whether they wanted no claims bonus protection.
"Had they been told the right price, they may have decided to cancel their no claims bonus protection or switch to another, cheaper provider.
Were you affected by this? Get in touch: mirror.money.saving@mirror.co.uk
“Thanks to our action, Tesco customers will now have the chance to decide whether they want to keep their current protection or get their money back.”
The CMA said Tesco Bank has now made sure the price reduction for removing no claims bonus protection in renewal letters is now correct for the affected customers.
The bank is writing to all affected customers to offer a refund to those who would have removed no claims bonus protection.
A Tesco Bank spokesperson said: "We apologise for this error, which we have now fixed.
"All existing customers who were impacted have been contacted with the option of a refund and the removal of their no claims bonus protection.
"However, the overwhelming majority of customers are choosing to retain their protection. In all cases there was no impact on the cover provided to our customers.”
Motor insurance costs have already risen by more than £100 this year as insurers look to claw back profits lost from new regulations.
New rules to end the controversial “loyalty penalty” for car and home insurance customers came in on January 1.
The term “loyalty penalty” is used to describe price increases for customers who stick with the same insurance provider year after year and don’t shop around.
This led to insurers offering cheaper deals to entice new customers, leaving loyal customers paying over the odds for sticking with the same insurance company.
The new measures - first announced back in May 2021 - will put an end to this and should, in effect, mean existing policy holders won’t be more than new customers.
But many insurers have already reacted by increasing rates for new customers as soon as the rules came in on New Years Day.
