FCA expands insurance work in response to Which? super complaint
Executive Summary
The FCA is expanding its planned supervisory work in home and travel insurance markets in response to a Which? super complaint, focusing on improving claims handling, information provision, and overall standards. This matters for compliance professionals as it intensifies scrutiny under Consumer Duty, requiring firms to demonstrate better consumer outcomes amid ongoing simplification of insurance rules. It signals heightened FCA expectations for evidence-based improvements in customer satisfaction and transparency. #
What Changed
This statement announces an expansion of existing planned work rather than new rules, with specific emphases over the next year on: - Improving claims handling through reviews of firms' processes. - Enhancing information available to consumers for judging policy quality (addressing the 31% dissatisfaction rate). - Building on prior simplification efforts, such as risk-based product reviews (replacing annual mandates), removal of prescriptive CPD requirements (e.g., 15 hours), and reduced data returns, as finalized in PS25/21. No immediate new requirements are imposed, but firms must align with Consumer Duty outcomes in a less prescriptive environment. #
What You Need To Do
- Review and enhance claims handling processes to ensure efficiency and fairness, preparing evidence for FCA supervisory reviews
- Improve pre-sale information on policy quality, addressing gaps where 31% of consumers lack sufficient data
- Adopt risk-based product and distribution reviews (per PS25/21), documenting rationale for frequency based on harm risks; align with co-manufacturers
- Embed Consumer Duty via outcomes monitoring, data-driven MI on customer behavior/complaints, and vulnerability support; shift from process compliance to evidenced effectiveness
- Retain records, respond to FCA data requests, and invest in governance/MI for supervision
- For bespoke contracts, ensure clear documentation of customer-specific design
Key Dates
Compliance Impact
Urgency: High - This expands active FCA supervision in 2026, overlapping with Consumer Duty embedding and insurance simplification; non-compliance risks intensified reviews, enforcement, or redress schemes (as seen in motor finance). Firms gain flexibility but face accountability for outcomes, with scrutiny on data quality and vulnerability handling amplifying risks in a trust-based regime.
Who is Affected
Summary
We're expanding the significant work we had planned to improve standards in the home and travel insurance markets, following Which?’s super complaint. Read our response to Which? (PDF)While 79% of consumers who make an insurance claim are satisfied with how it was handled, our work shows there's room for improvement - with 3 in 10 (31%) saying there isn’t enough information to judge the quality of different policies. Over the next year, we will do more to: Improve claims handling, by reviewin...