More than a million customers insured by the RAC could receive compensation after City regulators caught it failing to disclose annual price rises to customers.

The RAC is in the process of contacting affected customers who may have paid significantly over the odds for breakdown insurance as a result of their premiums rising without their knowledge.

Those who have overpaid could receive the price difference between the old and the new premium as redress, the FCA said.

The failing comes despite new rules being brought in by the Financial Conduct Authority a year ago forcing insurers to show customers their current premium compared to the next year's when deals end.

The difference is called a "loyalty premium", as insurers disproportionately hike the cost of insurance for customers who do not move to another insurer when their policy runs out.