FCA to expand insurance sector review amid Which? super-complaint pushback

But the organisation admitted it needed to do more in reviewing how companies handled claims and in ensuring consumers understood what their insurance policies actually covered, as it promised to step up scrutiny of the sector next year.

The pushback came as the FCA responded to a super-complaint by Which? launched in September, where the it claimed consumers were regularly being treated poorly by claims handlers and falling victim to unfair terms and conditions in policies.

The consumer group had claimed that the FCA was not doing enough to enforce consumer rights with insurance firms, but the financial industry regulator, in its response to the complaint (pdf, 38pages/696kb), said it “had not been persuaded by many of the conclusions” Which? had reached in its legal analysis.

“We will not therefore be taking forward Which?’s recommendation to conduct a joint review with the Government of our consumer protection frameworks at this time,” it noted in the report. “We’ve shared our analysis of these issues with the Government. It shares our view that the current legislative framework and available rules are sufficient to protect consumers and allow us to take appropriate action.”

However, the FCA believes there are issues in the industry which require further addressing. As a result, it will be expanding its work on standards in home and travel insurance markets by reviewing customer service delivery and launching an analysis of how different products are sold, which will include insurance firms, brokers, price comparison websites and trade organisations alongside consumer groups.

The goal, it said, was to look to improve claims handling and – with more than three in 10 users surveyed complaining of a lack of information to compare the quality of different policies – to seek to improve consumer understanding of exactly what their insurance covers.

It will also consider ways of better capturing claims outcomes data as part of the review, which will come in the second half of 2026.

Graeme Reynolds, the FCA’s director of competition and interim director of insurance, said the organisation had welcomed Which?’s super-complaint for shining a light on issues faced by insurance customers.

'We’ve set out more detail on the action we've already taken to fix problems, and we're expanding our existing workplan to improve the claims process and consumer understanding of their cover,” he added.

'We’ll be monitoring consumer outcomes and will continue to hold firms and their senior leaders to account for making improvements, to help build trust and make sure people get fair value insurance.”