Delayed complaints and poor settlement of claims have been uncovered by a Financial Conduct Authority (FCA) review. 

The UK financial regulator has put home and motor insurers on notice to improve their treatment of vulnerable customers and customer claims handling amid the cost-of-living crisis. 

In December 2022, the FCA sent a questionnaire to 11 firms representing 35% of the motor and 53% of the buildings and contents insurance markets. It sought information for the period between August and November 2022 compared to the 2021 12-month averages. 

“We saw examples of good practice, but we have also identified areas for improvement, particularly on the treatment of vulnerable customers and claims handling,” the FCA says. 

The regulator discovered instances of motor insurance customers being offered a payout lower than they should have under their car’s fair market value after it was written off. This is contrary to FCA rules. 

The FCA says its review did find some examples of good practice. These included firms providing greater forbearance, waiving fees or excesses, offering payment holidays, and setting up customer support hubs; dedicated website sections to help support and the use of voice analytics and specialist training to help identify vulnerable customers. 

FCA Consumers and Competition Executive Director Sheldon Mills says 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.” 

The FCA has finalised guidance for insurers which will come into effect on July 31 2023. It has advised firms affected to consider any changes they need to make to their processes to meet the expectations in this guidance.