Passing a driving test is an exciting milestone for any young driver. After countless hours of lessons and often multiple attempts, the desire to hit the road and enjoy newfound freedom is understandable. However, before that freedom can be realised, the matter of insurance must be addressed. Securing a policy for a newly-qualified driver can be expensive, often exceeding £1,000 for basic third-party cover alone. Consequently, many young drivers seek out deals to reduce costs.
Financial Conduct Authority Warning
The Financial Conduct Authority (FCA) has issued a warning that many are falling prey to so-called 'ghost brokers'. One Birmingham driving instructor has explained how this issue can lead young drivers to lose significant sums of money—and potentially their driving licences.
What Are 'Ghost Brokers'?
MJ, who operates M J Learners in Birmingham, detailed the issue on TikTok. He explained that the risk lies in policies arranged not through legitimate websites, as with major insurers, but via mobile messaging apps or social media platforms.
"They hook you up with a policy, which is then cancelled maybe a month or two down the line, just so you've got that certificate to prove you're insured," he said. "The initial insurance quote is normally ridiculously cheap. I had a student contact me saying they could get insured on a SEAT Ibiza as a young 17-year-old in Alum Rock, Birmingham, for just a grand. That immediately rings alarm bells."
MJ elaborated on the modus operandi: "How they do it is they add it on to different addresses, different people's names, they add on a bunch of fake details and information, they give you this cheap policy with the certificate, and then they cancel it later on so they get even more money back. So in the short run it saves you a lot of money, but when they cancel it you're driving around uninsured. If you go past an ANPR (Automatic Number Plate Recognition) camera, or police interceptors, your car is uninsured."
How to Protect Yourself
Explaining how to avoid falling victim to the scam, he continued: "Most insurance companies have dedicated websites or offices, so you can verify they're real, legitimate, and safe. Ghost insurance is normally where you get a number from your cousin who got insured off this guy, or this person gave me a cheap quote. You find them on social media, WhatsApp or a WhatsApp group, and that's it. They don't have anything to verify themselves with."
"I'm not saying every person selling insurance on social media is dodgy, but this is where most ghost brokers come from. So, if you're a first-time driver and you get ridiculously cheap quotes, double-check them. See if they have a registered office, if they're an actual insurance broker. Make sure it's not just Harry from down the road hooking you up with a one-time deal. If you get caught uninsured, the consequences can be severe after all that time and effort getting your licence."
FCA Data and Checking Service
The FCA reported that 49 per cent of drivers aged 17 to 25 have bought insurance through social media or messaging apps, and 45 per cent trust services bought this way. The FCA offers a checking service where drivers can confirm the legitimacy of an insurance provider. It is available at https://www.fca.org.uk/consumers/fca-firm-checker.
Penalties for Driving Without Insurance
According to gov.uk, it is illegal to drive on a road or in a public place without at least third-party insurance. The vehicle being insured is not enough—the driver must also be correctly covered. Penalties for driving without insurance include a £300 fine and six penalty points on your licence. If the case goes to court, you could face an unlimited fine and disqualification from driving. Police also have the power to seize vehicles being driven without insurance and, in some cases, destroy them.
