The Which? super-complaint to the FCA regarding home and travel insurance – an action plan for firms

An action plan for firms

There are a number of steps which relevant firms can be taking now whilst they await the FCA’s response to the Complaint (due by 22 December 2025) to ensure they are adequately prepared to deal with any developments, including an FCA intervention or market study:

1. Information gathering: The FCA response to the Complaint may lead to it seeking information from relevant firms, potentially as part of a market study. This information may need to be provided at short notice and relevant firms would therefore be well advised to start compiling data in relation to the areas targeted by the Complaint, including claims handling, historic internal reviews and internal policies and procedures. Having advance information about the key topics which are the subject of the Complaint will enable firms to think strategically about their responses if regulatory information requests are made, as well as to consider how best to meet any regulatory challenge or future consultation on market changes.
2. Governance and senior manager considerations: The FCA will expect firms to be monitoring the progress of the Complaint and also considering the extent to which they may be impacted by the issues raised. It may become necessary to evidence that this topic was on the agenda in relevant internal fora and was the subject of debate and challenge at an appropriately senior level, including learning the lessons from previous publications and past enforcement action and considering the need for any additional resource. Some firms may find that an internal project or working group with appropriate terms of reference and reporting protocols is helpful in bringing together relevant stakeholders, keeping track of actions and preparing to deal with any regulatory next steps.
3. Internal/ external review: Firms may wish to consider conducting an internal compliance review to determine the extent to which they are meeting FCA expectations across key areas such as those covered in the FCA's Dear CEO letter in 2023 regarding implementing the Consumer Duty and the Complaint and areas which have been the subject of enforcement action. High priority areas include assessing customer understanding of policy coverage, managing customers’ expectations throughout the claim journey and appropriate analysis of decisions by the Financial Ombudsman Service (FOS) and a “root cause” analysis on their own complaints. Taking proactive steps to identify and deal with any issues impacting the customer journey now may assist in reassuring the regulator that intervention is not needed or in negotiating the scope of any such intervention. It may also be helpful to obtain independent external advice in relation to approaches taken as part of the check and challenge process and so that advisers are in place and ready to deal with any regulatory challenge that may emerge.

To inform firms’ consideration of an appropriate action plan, we set out below further details of the Complaint, the next steps being advocated by Which? and previous FCA activity in this area.

Why is Which? bringing the Complaint?

A super-complaint is a formal procedure through which designated consumer bodies such as Which? can raise concerns that a feature, or a combination of features, of a market in the United Kingdom for financial services is, or appears to be, “significantly damaging the interests of consumers” (section 234C Financial Services and Markets Act 2000).

In the Complaint, Which? contends that the home and travel insurance markets are failing consumers in many ways, causing what it describes as avoidable financial and emotional harm over many years. Which? argues that this has had the effect of eroding firms’ incentives to adhere to regulation and reducing consumer trust in insurance markets generally.

Which? is focussing on home and travel insurance specifically because it says that these markets have some of the lowest levels of claims acceptance rates and the impact on consumers when things go wrong can be significant. The Complaint is about these two insurance product types as a whole rather than being focussed on specific firms.

The Complaint raises three features of the home and travel markets that Which? argues are significantly damaging the interests of consumers:

1. Poor claims handling: Such as: (i) poor claims and supplier management, including oversight of outsourced claims-handling providers; (ii) ineffective communication with customers on expectations, progress and claims outcomes; (iii) failing to identify customers in vulnerable circumstances and support them appropriately; (iv) insufficient claims governance, including the availability and use of management information; (v) customers having repeatedly to provide information and evidence; (vi) comparatively low claims acceptance rates; and (vii) firms not addressing systemic issues identified from relevant FOS decisions.
2. Inappropriate sales processes: Which? argues that consumers frequently misunderstand the coverage offered by insurance products. This is exacerbated by the prevalent use of comparison tools to compare and purchase home and travel insurance policies which limits the visibility of variations in policies to consumers at the point of choosing products. Which? believes that not enough is being done by either firms or the FCA to address poor consumer understanding. Indeed, it states that firm’s processes are often insufficient to assess the nature of a consumer’s demands and needs and the extent to which coverage matches them.
3. Lack of application and enforcement of FCA rules and other relevant law: Which? argues that evidence from external legal analysis it commissioned shows that leading providers continue to use policy terms and conditions that are not in line with FCA rules or wider consumer and insurance law. The Complaint cites examples where:
   1. policy terms and conditions deviate from statutory and regulatory requirements for the protection of consumers in the insurance market (such as terms which suggest, contrary to Section 11 Insurance Act 2015, that a failure to comply with a particular requirement entitles the insurer to refuse all claims, whether or not related to the failure);
   2. there is a lack of transparency and/ or clarity as to terms and exclusions (such as one travel policy which included significant health-related exclusions only in the middle of the policy documents without clearly explaining them in the Insurance Product Information Document); and
   3. the policy includes unfair terms under Part 2 of the Consumer Rights Act 2015 (here Which? contends that, in some policies, the need for original receipts, proof of ownership and proof of usage for items covered on travel insurance imposes a significant burden on consumers and third-parties and that there are good arguments that such requirements create a significant imbalance to the detriment of the consumer).

More broadly, the Complaint states that, over two years on since the implementation of the Consumer Duty rules for new products, the FCA has repeatedly found potential issues with non-compliance with FCA rules in the insurance market, but has failed to take adequate enforcement action as a result.  Which? points to issues identified in the FCA’s 2025 claims-handling report, such as high claim rejection rates for storm damage claims (see further on this report below) and complains that little has been said about what the FCA is doing to hold firms to account. Prior to issuing the Complaint, Which? made a Freedom of Information request to the FCA which suggested that low numbers of firms were being investigated – Which? does not regard this as sufficient in the circumstances and suggests that more visible enforcement action is necessary to act as a deterrent.

What has the FCA already been doing in this area?

Which? argues that poor levels of customer service and outcomes in the home and travel insurance markets have been tolerated by the industry and by the FCA.

The FCA has previously conducted reviews focused on claims-handling in home and travel insurance and, in 2025, the FCA published a report on its latest findings: Home and travel claims handling arrangements: good practice and areas for improvement (the FCA Report). Which? engaged with the FCA throughout the review which concluded that, whilst the FCA had seen examples of good practice, it had also seen many areas where improvements were needed, such as with regards to: (i) lack of control over outsourced arrangements; (ii) poor management information; and (iii) poor oversight of cash settlements.

In terms of next steps, the FCA stated that it would work with firms, trade bodies and other stakeholders to improve claims handling arrangements and deliver improved outcomes for customers. However, in the Complaint, Which? argues that it has found little evidence that the FCA has taken meaningful action to address the problems that exist in the home and travel insurance markets identified in the FCA Report, as well as in previous regulatory reviews, and that this amounts to “a pattern of consistent failure by the FCA to secure ‘an appropriate degree of protection for consumers’”.

Which? also believes that the FCA has missed or overlooked a number of key issues altogether. It says that this is, in part at least, because the FCA Report relied on data collected by providers, which is acknowledged to be sub-standard in places, and that this appears to have limited the FCA’s visibility of wider issues across the market. For example, Which? says the FCA has overlooked:

1. consumers experiencing repetitive or sequential requests for similar information and evidence when making a claim, which it says can be frustrating for consumers and erode their trust and confidence in their insurer and its agents’ abilities to properly carry out a task; and
2. average claims acceptance rates of 73% for home insurance and 79% for travel insurance between 2022 and 2024. Which? states that the FCA Report references these figures but did not reach any conclusion on whether this was a problem or cite any specific claims acceptance rates for any individual firms (despite publishing data on a named basis in its general insurance value measures). In Which?’s view, the average claims acceptance rates for home and travel insurance are too low, which is a poor outcome for consumers.

What is Which? asking for?

Which? would like the Complaint to lead to a reset of the markets for home and travel insurance as it believes that these markets need fundamentally to change if they are to meet the needs of consumers. Which? wants action in three areas, starting with what it sees as the most urgent:

1. FCA urgent intervention: Which? considers that the FCA needs urgently to intervene to tackle the failure of home and travel insurance firms to comply with their legal obligations, taking enforcement action where necessary. As part of this, the FCA should indicate the number of firms it is investigating, either through its enforcement or supervision activities. This may strike a chord with the FCA which is clearly still in favour of increasing transparency in investigations, including naming firms in some circumstances, notwithstanding the dropping earlier this year of its controversial proposals around a new public interest test (for further information in relation to the FCA’s current approach to investigation announcements, please see our briefing and our recent case update).
2. FCA market study: Which? wants the FCA to launch a market study to analyse, understand and address the underlying issues which are driving poor consumer outcomes for home and travel insurance customers, including consideration of the issues with the processes through which home and travel insurance products are sold, such as through comparison tools. Which? requests that this market study also investigates the business models driving poor claims-handing. The output of the study should be a robust set of policy interventions so that the market can work more effectively in the future, rewarding firms that support good customer outcomes and penalising those that do not.
3. Joint FCA and government initiative to review consumer protection legal frameworks in insurance: Which? proposes that the FCA and government work together to: (i) review consumer protection legal frameworks in insurance, including how well those in place are really working in practice; and (ii) identify key areas where these need strengthening. The Complaint sets out that this should include considering:
   1. Whether insurers are properly taking account of the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA 2012) in their policies and processes: CIDRA 2012 requires insurers to prove, before denying claims, that a consumer has failed to take reasonable care regarding representations they have made when taking out insurance. However, Which? found some policies include provisions which seek to provide insurers with rights beyond those in CIDRA 2012. According to the Complaint, strengthened provisions could include a duty on firms to inform consumers of their CIDRA 2012 rights, as well as making CIDRA 2012 presumptions clearer and simpler so that insurers do not inappropriately deny or restrict claims for ‘failure to disclose’ reasons.
   2. To what extent the Insurance Act 2015 has been successful in achieving its objectives, and how it might be improved to help address unfair treatment of consumers. Which? explains in the Complaint that this could include reversing the burden of proof so that it is for insurers, not consumers, to show that non-compliance with a particular term has resulted in a loss or increased loss. Which? also contends that the review should investigate whether the Insurance Act 2015 provisions requiring agreed claims to be paid to consumers in a reasonable time are being complied with.
   3. Reviewing and strengthening paragraph 29 of Schedule 20 of the Digital Markets, Competition and Consumers Act 2024 (DMCC Act). This provision identifies as unfair any practice requiring a policyholder making a claim to produce documents which are irrelevant to whether the claim is valid or failing systematically to respond to correspondence in order to dissuade them from exercising legal rights. In Which’s view, in light of the evidence on poor claims-handling, this provision could be improved, including to help tackle more effectively the issue of insurers unreasonably demanding documents and information from consumers trying to obtain cover or make claims.
   4. Extending to the FCA the powers in the DMCC Act to fine firms directly for breaches of consumer law in financial services matters. Which? believes that allowing the FCA (as well as the CMA) to fine firms for breaches of unfair commercial practices law and unfair contract terms would help provide the right incentives for firms to comply with the law, and expand the enforcement options available to the FCA.

How might the FCA respond to the Complaint?

The FCA has 90 days to respond to the Complaint, which takes it to 22 December 2025. There are a number of different actions it could take in response, including:

(i) taking enforcement action against particular firms; 
(ii) agreeing voluntary changes with the industry; 
(iii) conducting further investigations of its own;  
(iv) recommending action by another body (for example, another regulator or government);
(v) deciding that the Complaint is unfounded; or
(vi) concluding the Complaint requires no action.

These actions are not mutually exclusive and the FCA could adopt a combination of them.

Given the extent to which super-complaints have historically been effective in prompting regulatory action, including in the insurance market (for example in respect of PPI and the ‘loyalty penalty’), it is reasonable to expect that the Complaint will lead to the FCA conducting a market study in this area to inform consideration of regulatory reform and, potentially, also taking supervisory and/ or enforcement action in relation to poor practices by firms.

What should firms do now?

As set out in further detail above, there are a number of actions that relevant firms can be taking now whilst they await the FCA’s response to the Complaint to ensure they are adequately prepared to deal with any developments. These include firms:

1. identifying, gathering and interrogating data in relation to the areas targeted by the Complaint, including claims handling, historic internal reviews and internal policies and procedures;
2. monitoring the progress of the Complaint and considering the extent to which they may be impacted by the issues raised - an internal project or working group with appropriate terms of reference and reporting protocols may be helpful; and
3. considering conducting an internal compliance review, including in respect of policies and procedures, to determine the extent to which they are meeting FCA expectations across key areas and areas which have been the subject of enforcement action, with external support and assurance where appropriate.