One of my friends took out a car insurance policy yesterday and its extortionate. Its with a company called Hara Hill Wason. She wants to cancel it tomorrow morning to go with admiral as its much cheaper. Can they charge her an admin/cancellation charge?

From the CAB site: Insurance

Cancelling your insurance policy

 

You may want to cancel an insurance policy if you have just bought it and have changed your mind. You have a right to do this if you bought your policy over the phone, on the internet, or from someone who called at your home or place of work. You may also have a right to cancel your insurance policy if you paid for it by a credit agreement which you signed in your own home, or anywhere other than the offices of the credit company. If you bought your policy under circumstances other than these, you should still check the terms of the policy to see if you can cancel it. Many general insurance policies give you an automatic right to cancel within 14 days of purchase, and many life insurance policies give you the right to cancel within 30 days. Your insurer is allowed to make a small charge for the administration costs of cancellation, but they are not allowed to make a profit from this charge.

You may also want to cancel your insurance policy because your circumstances have changed. You should check the details of your insurance policy to see if you have a right to cancel, and if any refund is due.

For more information about your right to cancel an insurance agreement, see Buying services - your rights.

Same principle as bank charges, they can cover their costs but nothing more so it should be minimal.

99% of companies do not charge. However, if you have made a claim then you wont get a penny back!

There is a short paragraph about cancellations on th eback of on eof the documents. It ssay sif cancelled within 14days they reserve th eright not to return the £15 admin charge but also they will keep 7.5% of the premium which is gonna be £65+. Can they do this? What kind of things should I be saying to them when we speak to them on the phone? If they insist on doing this what action can I take?

As above, ask them to justify any amount in the context of admin costs. Read them that paragraph if neccessary.

I though you got a cooling off period for any product such as this, but what do I know. I did however, take out a £25k loan recently, then changed my mind and gave it back after 10 days, no charges involved there, and I kept the interest, haha!