In a new review by the Financial Conduct Authority (FCA), home and motor insurers have been urged to enhance their treatment of vulnerable customers and improve claims handling. This follows an upsurge in complaints about insurance claims.
The FCA review highlighted numerous instances of extended complaints handling times and inadequate settlements. It also unearthed cases where motor insurance customers were offered amounts lower than their car’s fair market value following a write-off, contravening FCA rules. The regulator has directed all concerned firms to correct these errors and offer redress to affected customers where required.
The FCA’s scrutiny also showed that some firms could not demonstrate effective monitoring of customer outcomes. It called for improved information sharing, especially where intermediaries were involved in claims settlement. Moreover, some firms failed to show adequate capability in identifying vulnerable customers in need of extra support.
The FCA is taking action against firms breaching its rules, urging customers to lodge complaints with their insurance company if they experience delays in their claims or are dissatisfied with how their claims are being managed. If unsatisfied with the firm’s response, customers can also raise a complaint with the Financial Ombudsman Service.
Despite these issues, the FCA review did uncover examples of good practice. These include firms demonstrating greater forbearance, waiving fees or excesses, offering payment holidays, and establishing customer support hubs. Other commendable practices included the creation of dedicated website sections for vulnerable customer support and the use of voice analytics and specialist training to identify vulnerable customers.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Timely and fair claims handling is especially vital during the cost of living squeeze. While we have seen many firms treating their customers correctly, we found too many examples of customers not receiving the service they’re entitled to. Where we found issues, we’ve told firms to put them right. We’ll be monitoring them to ensure they do.”
In addition to the review, the FCA has issued new guidance for insurance firms about supporting their customers, which provides clarity to firms about the steps to take if they identify customers facing financial difficulty. It has also proposed strengthening protections for borrowers in financial difficulty (including for premium finance).
The FCA’s actions form part of its strategy to deliver good outcomes for consumers and its drive for higher standards across the UK’s financial services sector.
