FCA orders insurers to fix claims handling issues
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The Financial Conduct Authority has asked home and motor insurers to improve their treatment of vulnerable customers and the way they handle claims following concerns over poor practice.
An FCA review about how insurers are supporting vulnerable customers has found an increase in complaints about insurance claims and incidents of lengthy claims handling times and people not given appropriate settlements.
The regulator also 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.
Some firms in its sample of 11 insurers were unable to demonstrate how they effectively identified vulnerable customers.
The FCA said it had told firms to “put these wrongs right” and where necessary provide redress to affected customers.
Sheldon Mills, executive director for 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.”
The watchdog also found examples of good practice in its review, including: waiving fees and excesses; adjusting payments; offering payment holidays for up to 12 weeks; actively inviting customers to speak to the firms if their circumstances had changed; setting up a customer support hub and removing mid-term adjustment fees.
Some firms use voice analytics and provide specialist training to help identify vulnerable customers, the FCA added.
Alongside the review, the FCA has finalised guidance for insurers 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.
The guidance, which will come into effect on 31 July, builds on the upcoming consumer protection rules at the end of this month known as the consumer duty.
How do you support vulnerable customers?
