Hi everyone I am having the same problem with Budget's cancellation charges. I have looked on the FSA website (the Handbook) and found this in the insurance rules: " Payments Where a retail customer exercises a right to cancel under ICOB 6.2.1 R: (1) the insurer must pay to the retail customer without delay, and no later than 30 days after the date on which the insurer received notice of cancellation from the retail customer, any sums which the retail customer has paid to, or for, the benefit of the insurer in connection with the contract (including sums paid by the retail customer to agents of the insurer) except for the amount referred to in (2); (2) where the contract is a general insurance contract, subject to (3), the insurer is permitted to require the retail customer to pay for the services it has actually provided in connection with the contract. The amount payable, however, must not: (a) exceed an amount which is in proportion to the extent of the service already provided to the retail customer by the insurer in comparison with the full coverage of the contract; and (b) be such that it could be construed as a penalty; (3) sub-paragraph (2) applies only: (a) where performance of the contract has commenced before expiry of the cancellation period and this was requested by the retail customer; and (b) where the insurer can demonstrate that the retail customer was provided with details of the amount which he may be required to pay if exercising his right to cancel in accordance with ICOB 6.2.1 R" I think basically what it's saying is that an insurance co can't charge you for what you haven't used in insurance. Sub clause (3) I think just means that if an insurance company hasn't stipulated the amount you pay in the event of cancellation, they can't charge you anything (i.e., it's there for the consumer's benefit, not the insurance company's). I don't know what everyone else thinks about this but I have written to them and they have just denied they are in breach of the rules. I'm now taking the complaint to the Ombudsman and I will let you know what happens.