Briefing: Unwrapping the FCA’s super complaint response

When I was being brought up, my mum always – rightly – taught me that it was incredibly rude to act disappointed when you unwrapped a gift, no matter how unimpressed you were.

This always seemed to grate up against other advice I heard to not trust Greeks bearing gifts, but I digress – the advice was, for the most part, sound. 

One week before Christmas on 18 December, the insurance industry unwrapped its own early present as the FCA released its much anticipated response to the Which? super complaint over outcomes in the home and travel insurance markets.  

In the response, the regulator said it would expand ”the significant work” it had planned to “improve standards” in these consumer-focused lines. 

This included new actions, such as expanding the scope of planned outsourcing oversight to include different delegated authority models and, crucially, following up with firms to ensure they comply with rules and consumer protection legislation. 

The FCA has been active in addressing consumer concerns in the home and travel insurance markets, but the anticipated response to the super complaint was somewhat bereft of anything particularly exciting. 

Great expectations?

But, just like when you’re unwrapping presents, excitement comes from anticipation – and is it really fair to expect the regulator to set off fireworks in its response to a consumer organisation’s complaint? 

Probably not. Or at least not all at once. That we don’t expect excitement from our nation’s financial services regulator is a positive. Can you imagine the alternative?

It is right that the FCA acknowledged the specifics of Which?’s complaint and responded by highlighting its own work to address concerns in these consumer insurance markets. 

But some market reaction to the response seemed frustrated at this lack of concrete action.

For example, James Daley, managing director for consumer organisation Fairer Finance, welcomed the FCA’s acknowledgement of problems, before adding it was ”unlikely to be sufficient to get to grips with the many and growing problems in this sector”.

Indeed, Which? itself said: ”We are pleased that the FCA has taken our concerns seriously. The actions announced today must be the first step towards fundamental reform to ensure these markets work better for consumers. 

”Which? expects the FCA to work closely with insurers, comparison sites and consumer groups, but it is essential that any industry-led solutions are accompanied by firm action by the regulator. We will continue to work with the FCA – but also hold the regulator to account to ensure it acts with urgency and that these commitments lead to meaningful change for consumers.” 

These are real problems that need addressing – concerningly low claims acceptance rates and customers not understanding the products they are buying both lead to the the shredding of the industry’s reputation, as well as negative second order impacts like underinsurance and fraud.

But, by law, the regulator had just 90 days to respond to Which?, meaning that it was compelled to respond before Christmas. 

And, as anyone working in the sector knows, the regulator is not always the best-placed entity to solve problems – especially at speed.

It is understandable that consumer organisations would call for urgency, but doubly understandable that the FCA would urge caution in any new enforcement action.

Disappointment at this middle of the road response is not the same as acting disappointed when unwrapping an unimpressive Christmas present, granted. But if you’ve been bought socks every year for a decade, perhaps you should expect socks again. 

Merry Christmas everyone.