FCA Widens Scrutiny of Home and Travel Insurance After Which? Super-Complaint, Declines a Market Study and Promises an Update by End-2026

The UK's Financial Conduct Authority (FCA) has agreed with part of a consumer group's complaint about home and travel insurance and is widening its work, but it has declined to launch a full market study. Which? submitted a super-complaint on September 23, 2025, arguing that insurance manufacturers and distributors show poor claims handling and inappropriate sales practices, and concluding that the FCA had failed its statutory objective to secure an appropriate degree of protection for consumers. The FCA published its response on December 18, 2025. This article summarises the FCA's response as described by the law firm HFW. An earlier version of this article described the FCA's expanded scrutiny as a development of 2026. The response was published in December 2025, and the work it describes continues through 2026, so the article now gives the dates. Our sources describe the response, not the detailed FCA document, and readers who need precise wording should consult the FCA's publication.

What did the FCA accept? The FCA accepts that complaints and claims-acceptance data show that firms must do more to meet the Consumer Duty in this area. The Consumer Duty is the regulator's standard requiring firms to deliver good outcomes for retail customers. It points to existing work, including Guaranteed Asset Protection (GAP) insurance, support for the government's motor insurance taskforce, and an evaluation of pricing reforms that it found effective in reducing price-walking, which is the practice of charging loyal customers more at renewal. It also published a roadmap in July 2025.

What enforcement does it cite? The FCA cites two investigations launched, independent reviews of three firms' claims handling, feedback to major price comparison websites, and expanded analysis of sales processes. These are examples of action it says it has taken. The sources do not name the firms.

What will it expand? On claims handling and service quality, the FCA will review customer service, oversight of third-party claims handlers, and managing general agents, and widen this to delegated authority models, remuneration and conflicts. On customer understanding, it will analyse how different sales processes affect consumer outcomes. It identified two theories of harm: first, that sales and distribution processes limit consumers' ability to compare quality and suitability; second, that claims-handling incentives and supply chain arrangements reduce claims quality. The FCA will conduct focused analysis of the first issue, and handle the second through its existing work programme.

What did the FCA reject? It rejected Which?'s claim that it failed to enforce its rules and consumer law. It declined to run a market study at this stage. It will, however, consult in the first quarter of 2026 on reflecting the Digital Markets, Competition and Consumers Act in its Handbook, and notes that it has already used powers under that Act to require unauthorised law firms to provide information on exit fees.

What happens next? The FCA says it will publish a public update on its actions by the end of 2026. That means the next significant information is expected after the period covered by this article. Insurers, brokers and price comparison sites should expect questions about how their sales processes explain cover and how their claims arrangements operate, especially where claims are handled by third parties.

What does this mean for consumers? The FCA's response does not change any policy, and it does not give consumers new rights directly. It signals priorities for the regulator's supervision, and firms that fall short could face action. Consumers with a complaint can go to the firm first and then to the Financial Ombudsman Service. They can also compare policies carefully, noting exclusions, excesses and limits, and keep records for any claim.

What does it mean for firms? The Consumer Duty applies to all parts of the distribution chain. The reference to managing general agents and delegated authority suggests that the FCA will look beyond the brand customers see to the firms that actually handle claims. Remuneration and conflicts of interest between distributors and claims handlers are named as areas of interest.

How does a super-complaint work? Under UK rules, designated consumer bodies such as Which? can ask the FCA to investigate features of a market that they believe significantly harm consumers. The regulator must respond publicly within a set period and say what it will do. The process does not force a particular outcome, but it puts the regulator's reasoning on the record, which is why the response is useful to read. In this case the FCA agreed on the problems with claims and sales, but chose to address them through supervision rather than a market study.

Why might the FCA have declined a market study? The sources do not give its full reasoning beyond saying it sees the issues as already within its work programme. A market study is a formal and lengthy exercise, and the regulator may judge that targeted supervision and enforcement will move faster. Which? and others may disagree, and may press for more action when the FCA publishes its update at the end of 2026.

This article summarises a regulator's response as reported by law and trade sources and is not legal advice.