03 Jul FCA warns insurers about support provided to struggling customers
Home and motor insurers must improve their treatment of vulnerable customers and how they handle customers claims, a review by the Financial Conduct Authority has found.
Following an increase in complaints about insurance claims, the FCA uncovered examples of lengthy complaints handling times and people not given appropriate settlements. The regulator discovered instances of motor insurance customers being offered a price lower than their car’s fair market value after it had been written off, which is against FCA rules. Relevant firms have been told to put these wrongs right and where necessary provide redress to affected customers.
The review also found that some firms were unable to show they were monitoring customer outcomes well enough, and that better information sharing was needed where insurers dealt with intermediaries to settle claims.
Some firms also failed to show they were adequately able to identify vulnerable customers in need of additional support.
The FCA is taking action against firms who have broken its rules and says customers should contact their insurance company to complain if their claims have been delayed or they’re not happy with how their claims are being handled. They can also raise a complaint with the Financial Ombudsman Service if they are not satisfied with the firm’s response.
The FCA did however also find examples of good practice in its review, including:
Firms providing greater forbearance, waiving fees or excesses, offering payment holidays and setting up customer support hubs
Dedicated website sections to help support vulnerable customers, both financial and non-financial
The use of voice analytics and specialist training to help identify vulnerable customers.
Sheldon Mills, Executive Director, 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.’
Alongside the review, the FCA has finalised new guidance for insurance firms about how they should support their customers, providing further clarity to firms about what they should do if they identify customers who are in financial difficulty. We have also consulted on strengthening protections for borrowers in financial difficulty (including for premium finance).
The FCA’s actions are part of its Strategy to deliver good outcomes for consumers and its push to see higher standards across the UK’s financial services sector.
