In December 2025, the FCA issued its 38-page response. While the complaint and subsequent response may not have any direct implications for you, we’ve shared some of the information provided by the FCA to highlight things that the regulator is doing in its day to day operations that don’t always make the headlines, and what is shaping their approach.
The complaint considered that three features of the home and travel insurance markets were causing significant damage to consumer interests:
In its response to the complaint, the FCA states that its own data showed that in 2024, most consumers making travel and home claims were satisfied with the result. However, their data, which included complaint numbers and claim acceptance rates, did indicate that firms must do more to meet the standards required by the Consumer Duty.
In their response, the FCA made some concessions to the complaint and expansion of work in certain areas, although much of the response is about explaining the work the regulatory is currently doing. It also reiterates the importance of the Consumer Duty and their reliance on firms complying with it.
When compared to other insurance products, travel and home insurance have persistently lower claims acceptance rates, which would partially reflect lower consumer understanding. Data related to claims satisfaction, such as complaint numbers and data from the FOS indicates a worsening performance in the period up to 2024.
As the table shows, claims acceptance rates for home insurance are not only the lowest, but they have also fallen every year from 2022 to 2024.
This decline in performance triggered the FCA’s review of home and travel insurance claims handling in 2024. The review found issues including poor oversight of outsource claims management and insufficient monitoring of management information.
The complaint response Response to Which?’s super-complaint on addressing poor consumer outcomes in home and travel insurance includes a table outlining the areas of concern raised by Which? and the actions the FCA has taken, and continues to take in each of these areas.
The response also details some interesting metrics including that in 2024, home insurance was the third most common retail insurance product in the UK, with more than £7b in premiums derived from around 22 million policies.
Travel insurance is the eighth most common insurance product with over 6.8 million policies generating £1.26b in consumer premiums.
In 2024, insurers paid out nearly 900,000 home insurance claims and 600,000 travel claims totalling £3.2b and £400m respectively.
Financial Lives Survey
Disappointingly, the FCA’s Financial Lives survey shows that UK adults trust in the insurance sector as a whole is the lowest of all retail financial services, with 66% of respondents saying they had a low level of trust. The three most common problems identified by UK adults claiming on a general insurance policy in the two years to 2024 were:
• The claim taking longer than expected (8.8%)
• Poor service or communication from the insurer (8.1%)
• Poor service or communication from outsourced service provider (6%)
The true value of any insurance policy is only realised when it’s time to make a claim, so getting the claims process right is vitally important for all concerned.
The Bigger Picture
In addition to addressing home and travel insurance, the FCA widens its response by giving examples of case work and other interventions it has taken. For example, between January 2022 and September 2025, it assessed more than 21,000 cases for firms in the retail and commercial insurance portfolio. This includes reports from consumers, firms and 554 whistleblower report. A quarter of these cases (and half of the whistleblower ones) resulted in direct action by the FCA.
The FCA explains that “When we choose not to take direct action, it doesn’t mean we’ve overlooked the issue. It may be that we have been unable to substantiate the concerns, firms may have already responded or proposed solutions, or another body may be better suited to address it (such as the Financial Ombudsman Service), for example where the issue relates to an individual consumer. Sometimes, the concern is part of a broader problem that we may tackle at the market level, through multi-firm projects, thematic work (pieces of work where we examine specific topics or potential issues across several firms) or market studies.”
The FCA also took the opportunity in its response to list its successes and major work in recent years. This included:
• Securing £70m in savings for consumers following their work on GAP insurance
• 2 market studies which are investigating whether the market for pure protection insurance products (which support families if someone becomes critically ill or dies), is working for consumers and looking at whether people who borrow to pay for motor and home insurance are receiving fair, competitive deals
• Evaluated the pricing reforms, which the FCA found to be effective in curbing price-walking, so loyal customers aren’t penalised
• Obtaining over £350,000 in compensation for 2,500 customers after stepping in with one insurer over unclear endorsements on home insurance policies
• Secured £200m in compensation for 270,000 customers who had received too little after their car was stolen or written off and driven improvements in how insurers deal with these claim
he FCA didn’t miss the chance to announce what it has done with firms that were included in the work that led to the July report (which led to the Which? super-complaint as the consumer body did not feel the FCA had gone far enough):
• Opened 2 enforcement investigations. The firms were not named for confidentiality reasons
• Commissioned independent reviews of 3 firms’ claims handling systems and controls (through section 166 reports by skilled persons). Later in the response it says that there were 12 s166 reports in the insurance sector from 1 April 2024 to 30 September 2025
• Required 3 firms’ senior managers to attest to strengthen their systems and controls
• Asked 13 out of 15 home insurers in their sample to review how they’ve handled storm and/or cash settlements. Later in the response it says 9 of these firms will have to attest where the review found that home insurers either rejected higher-than-average storm claims or did not have sufficient controls over the management and monitoring of cash settlements
• Following the home and travel findings, the FCA invited 1 firm to sign a voluntary requirement (VREQ) which places restrictions on their business until they’ve made improvements. This is now in place
• Provided feedback on sales journeys to the 4 largest price comparison websites
Of the 23 insurers involved in the FCA work, only 7 didn’t have material concerns. Out of those 7, 3 have been asked to tell the FCA about any steps they have taken in response to their feedback and 4 have been advised that the FCA may request this detail in the future but doesn’t intend to take further action at this stage.
Still to come
As we mentioned earlier, the FCA is expanding its work following the Which? supercomplaint. This includes;
- Improve claims handling and service quality by reviewing firms’ customer service and delivery and how they oversee third parties that handle claims. The work has been broadened from the original scope which was going to focus on MGAs. Vulnerable customers will be the focus of the service quality work
- Improve consumer understanding by analysing how firms’ different sales processes affect the outcomes people are getting
The FCA will also:
- Consider how they are capturing claims outcomes as part of their post-implementation review of the value measures rules
- Reviewing how home and travel insurance firms are acting to improve consumers’ understanding of their insurance cover and share best practice with the industry
- Work with the industry and consumer groups to find new ways to improve consumer understanding of their insurance cover
- Begin publicly consulting on reflecting the Digital Markets, Competition and Consumers Act 2024 in the Handbook
In its complaint, Which? was also critical of the lack of Enforcement and other action from the FCA, such as the Consumer Rights Act 2015 (“CRA”). This is rebutted throughout the response, with the FCA highlighting all the other tools it uses. With regards the CRA point it says a lot of the work on this isn’t made public due to confidentiality laws. However, the FCA stresses that they are “taking action where needed. For example, since January 2022, across the insurance sector, we have written to 32 firms to raise concerns with terms under the CRA. This has resulted in changes to 40 terms in consumer insurance contracts and more than £11m of redress being paid to consumers.”
What this means for you
Based on the FCA’s response, we don’t expect most well-run firms will need to make any changes to their existing sales arrangements or claims handling processes purely as a result of the Which? super-complaint.Most of the FCA’s response is explanatory, rather than directive but it is clear that the regulator will take supervisory and enforcement action where it identifies material weaknesses in firms.
