A crackdown on soaring insurance prices has intensified after the City regulator started a review into lending schemes used by millions of people to pay for motor and home cover in instalments.

The Financial Conduct Authority said on Wednesday that it would scrutinise the premium finance market because it was worried that consumers are being ripped off. The inquiry was announced on the same day that the government revealed it was setting up a separate industry taskforce to tackle the “spiralling” cost of motor cover, hitting shares in the leading sellers of car insurance. Direct Line and Admiral, which both also make money from premium finance, closed down 6p, or 3.2 per cent, to 176½p and 62p, or 2.2 per cent, to £27.14 respectively.

Car