UK Insurers Fall Short in Providing Good Customer Outcomes, FCA Reveals

Some British insurers still fail to provide good outcomes for consumers, according to a review by the Financial Services Authority. Poor value and product oversight remain significant issues. The FCA's Consumer Duty aims to improve consumer protection and value in insurance products.

Some of Britain's car, home, and other insurers are still failing to demonstrate they deliver good outcomes for consumers, according to a review from the Financial Conduct Authority (FCA). A year after the introduction of tougher protections for policyholders, the FCA's thematic review revealed poor customer value and potential harm due to weak product governance, oversight, and controls.

The review highlighted that many insurers have not implemented effective frameworks to show evidence of providing good value to customers. It also noted that firms are not adequately considering the total price paid for a policy, including how remuneration impacts the product's overall value.

'Progress is being made, but we are still seeing too many examples of insurers and brokers lacking the right information, governance, or oversight to ensure their customers get consistently good outcomes,' said Matt Brewis, the FCA's director of insurance. The Association of British Insurers (ABI) acknowledged the progress but emphasized that more work is needed, with members committed to the ongoing process.

Introduced in July 2023, the FCA's Consumer Duty aims to provide comprehensive consumer protections across the financial sector, addressing years of mis-selling scandals. The latest indicators for value in insurance products, assessed by the proportion of premiums paid in claims, were also published. The FCA will contact firms where data suggests low value to understand their products and actions taken to improve value.

'Where we believe a firm has failed to act and is still providing poor value products, we will intervene where necessary to protect consumers,' the FCA stated.

(With inputs from agencies.)