FCA Faces Call to Action in a Super-Complaint Over Consumer Harm in Home and Travel Insurance

On 23 September 2025, Which? used its statutory powers to submit a super-complaint to the FCA regarding certain features of the consumer home and travel insurance markets that it believes are significantly damaging the interests of consumers¹. It suggests that both manufacturers and distributors of insurance are responsible.

The complaint focused on two relevant markets:

• The retail home insurance market which covers policies distributed to consumers in the UK, including contents-only, buildings-only and combined buildings and contents policies.

• The retail travel insurance market which covers policies distributed to consumers in the UK, including single-trip, European annual, and worldwide annual policies.

Which? initially launched a public campaign in summer 2024 for the FCA to “End the Insurance Rip-off“.  Since that time, the FCA has undertaken work in this area, and in July 2025 published a report on home and travel claims handling, setting out good practice and areas for improvement.

However, Which? argues that the FCA’s actions were insufficient, as the FCA did not name firms, launch further investigations or take any enforcement action.  The super-complaint states that the FCA relied on data collection for its claims handling report, and did not include significant research with consumers or industry professionals, so has missed or overlooked important issues. Accordingly, Which? considers that the FCA has failed to meet its statutory consumer protection objective.

Specific features of consumer home and travel insurance markets highlighted

Which? analysed over 8,500 Financial Ombudsman Service (FOS) decisions related to these areas of insurance; conducted interviews and surveys; and instructed an external barrister to review a sample of policies and product information documents and to give an opinion on legal and regulatory compliance. The super-complaint sets out that this has identified:

Poor claims handling

• Poor claims and supplier management, including oversight of outsourced claims-handling providers making it difficult, for example, for firms to meet the Consumer Duty outcomes;
• ineffective communication with customers on expectations, progress and claims outcomes, meaning, for example, that customers do not understand why a claim is denied, thus reducing their ability to challenge the decision;
• failing to identify customers in vulnerable circumstances (including those that are vulnerable due to the very event that has led to the claim, such as a fire in their home) and support them appropriately, in particular in relation to the use of cash settlement of claims;
• insufficient claims governance, including the availability and use of management information;
• repeated requests being made to customers for information and evidence;
• comparatively low claims acceptance rates in home and motor claims (e.g. it is said the rates are 63% for buildings insurance and 77% of contents-only claims as compared to 99% for motor insurance²) with large unexplained differences in claims acceptance rates between insurers; and
• firms not addressing systemic issues identified from relevant FOS decisions, such as unfairly delayed claims.

Inappropriate sales processes:

• Widespread lack of understanding by consumers of insurance products, including confusion about the nature and extent of insurance coverage, meaning that consumers often expect they will be covered for things typically excluded, such as connecting flights;
• assumptions by consumers that different policies offer similar protection and that there are minimum standards protected by regulation;
• sales processes, such as comparison websites, reinforcing the view that product variation is limited; and
• missed opportunities to address these misunderstandings, for example including prompts in the sales process to flag the availability of add-on cover.

Which? suggests that the industry and the FCA should use behavioural science to improve consumer understanding, and the FCA should launch a market study to understand why markets are not addressing the issues in this area.

Non-compliance with FCA rules or wider consumer and insurance law:

• Although policy terms may not in practice always be applied strictly, nonetheless various terms examined improperly deviated from regulatory and statutory protections for consumers;
• there was a lack of transparency and/or clarity as to terms and exclusions (which may also operate to the detriment of consumers); and
• polices included unfair terms under Part 2 of the Consumer Rights Act 2015.

The super-complaint says that many of these issues do not feature in the FCA’s claims-handling report.

Proposals for improvement

Which? is calling for a “reset” of the home and travel insurance markets, so that they meet the needs of consumers.  The following three proposals are put forward:

Urgent FCA action to address non-compliance by firms.

This would include:

• explaining how the possible firm-specific and industry-level interventions and actions concerned in the claims-handling review are progressing;
• investigating any breaches of wider consumer protection law by particular firms;
• producing an initial assessment of the wider scale of potential non-compliance; and
• working proactively with other regulators and bodies to help address non-compliance of insurers with FCA rules and breaches of further legal obligations to consumers, for example under general consumer, equality or insurance laws.

An FCA market study to address the home and travel insurance market dynamics driving poor customer outcomes. 

The scope of this market study should include distributors’ sales processes, and insurers’ claims handling practices and business models. The study should focus on the oversight of outsourced claims handling providers and other third parties, and commercial arrangements between firms, to ensure that firms throughout the supply chain are incentivised to support consumers and make timely and fair claims decisions.

A joint FCA and government initiative to review consumer protection legal frameworks in insurance and identify key areas where these need strengthening.

This would include considering:

• whether insurers are properly taking account of the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA 2012) in their policies and processes;
• to what extent the Insurance Act 2015 has been successful in achieving its objectives – for example considering whether the burden of proof for showing that any non-compliance with policy terms could not have caused the actual loss³ should be reversed, so that it is for insurers to show that any policy breach has resulted in or caused the loss that is the subject of a claim, before that claim may be denied;
• strengthening paragraph 29 of Schedule 20 of the Digital Markets, Competition and Consumers Act (DMCC Act), to tackle more effectively the alleged issue of insurers asking unreasonably for documents and information on a claim; and
• extending the powers in the DMCC Act to fine firms directly for breaches of consumer law in financial services matters to the FCA.  At the moment the Competition and Markets Authority has direct fining powers.

Next steps and FCA response

Under its statutory framework, the FCA must publish a response within 90 days of the super-complaint, meaning before year-end 2025. This response must state how the FCA proposes to deal with the super-complaint.

The suggestion in the super-complaint that there is non-compliance with regulation, insurance contract law and consumer law in relation to travel and home policies will be of concern.  Providers might want to review their wordings and processes to address any issues proactively, but equally it would seem sensible to wait for the FCA’s response before taking action.  Acting before this point could be premature if, for example, the FCA dismisses the super-complaint, or if the FCA’s proposed actions contradict with those which a firm has taken in anticipation of the response.

Edward Stembridge, Trainee Solicitor, assisted with the preparation of this briefing.

Footnotes:

1. A super-complaint under s11(1) Enterprise Act 2002 allows designated consumer bodies to submit complaints that any feature or combination of features of a market in the UK for goods or services is or appears to be significantly harming the interests of consumers.
2. Data from 2023
3. S11 Insurance Act 2015.