The Financial Conduct Authority plans to ban opt-out insurance sales – where consumers are defaulted into buying a product with pre-ticked boxes.
In many cases the regulator found that consumers buy insurance products by accident when they are added automatically late in the transaction.
The ban would apply to add-on sales of regulated or unregulated products including mortgage protection and legal expenses sold with home insurance.
Christopher Woolard, director of strategy and competition, said: “This is about ensuring consumers can make the right decision on what add-on insurance they do or don’t need.
“Forgetting to un-tick a box at the end of a purchase is not making an informed choice.”
The regulator wants firms to provide suitable guidance on which add-on products are most suitable, while it encourages firms to compare packages of the primary product and add-ons early in the sales process.
To make it easier for the consumer the FCA also wants firms to provide the annual price of add-ons rather than a monthly figure.
The consultation period ends on June 25.
Woolard added: “These proposals will mean that consumers will be in a better position to decide what they want and consider the options available to them.
“Fewer consumers will end up with products they didn’t want or don’t even know they own.”