FOS complaint levels climbing despite Consumer Duty reforms

The advent of Consumer Duty in 2023 was supposed to herald an era of improved customer service for the industry’s consumers, with the new regulations aiming to ensure good customer outcomes.

But if market intelligence firm Insurance DataLab’s analysis of the latest Financial Ombudsman Service (FOS) complaints data is anything to go by, there is still some way to go.

Indeed, the number of general insurance complaints referred to the ombudsman over the third quarter of 2025 rose by some 13% year-on-year to more than 11,250 – meaning that FOS referrals are now at their highest levels since the beginning of 2023.

Within these figures, there are a number of business lines that look particularly concerning.

Travel focus

One of the most notable trends is the stark rise in the number of travel insurance complaints, which have surged by more than 58% over the three months to the end of September, compared to the same period a year earlier.

The FOS received 1,390 travel-related complaints in Q3 2025, making travel the third most complained about product line in UK general insurance (UKGI).

This figure also represents one of the highest quarters on record for travel complaints, with the exception of the period in the immediate aftermath of the Covid 19 pandemic when the sector was flooded with complaints.

It is worth noting, however, that more than half of all complaints referred to the FOS over the 12 months to the end of September 2025 relate to just one insurer.

But even with this statistic in mind, it is no surprise that consumer support organisation Which? launched a super complaint aimed at the travel insurance market, citing “systemic problems with how policies are sold and explained and also with how claims are then handled”, especially in the home and travel markets.

Indeed, upheld rates for travel complaints referred to the FOS have topped 40% in more than half of the quarters over the last five years. Things have improved recently, however, with the upheld rate standing at 35% in Q3 2025, down from 42% a year earlier.

But this still means the ombudsman is saying that the insurer made the wrong decision in more than a third of cases.

Insurance DataLab co-founder Dan King said the figures underline the gap between regulatory intent and real-world customer outcomes.

“Travel insurance is one of the clearest examples of where the industry continues to struggle to deliver consistently good customer outcomes,” he said.

“The sustained volume of complaints, combined with relatively high upheld rates, suggests there are still gaps in how policies are sold, how exclusions are communicated and how claims decisions are reached.

“While some improvement is evident in recent quarters, the fact that the ombudsman is still overturning more than a third of decisions should be a concern for insurers operating in this market, albeit one particular insurer is the cause of the majority of these complaints.”

Problems at home

Home insurance, another target of the Which? super complaint, has also seen a significant increase in complaints, with FOS referrals climbing by more than a quarter year-on-year in Q3 2025.

This means that home insurance is now the fifth most complained about general insurance product alongside private medical and dental insurance, with each business line having almost 500 cases referred to the FOS over that period.

The 26% increase in home insurance-related ombudsman referrals is the second biggest increase of the most complained about business lines, with complaint volumes rising in three of the last four quarters.

Unlike travel insurance, upheld rates have been climbing in the home insurance market. Indeed, the proportion of complaints found in favour of the customer has topped 30% in the 10 most recent quarters, having previously been comfortably in the 20s for the 11 preceding quarters.

King said: “The rise in home insurance complaints and upheld rates points to ongoing weaknesses in claims handling and post-sale processes.

“The FCA has been clear about the need for insurers to demonstrate fair value and effective customer support throughout the policy life cycle and the ombudsman data suggests that this is not yet being delivered consistently.

“Increasing upheld rates indicate that issues are not just about customer dissatisfaction, but about decisions that are failing regulatory expectations.”

Motoring on

Unsurprisingly, motor insurance continues to receive the greatest number of complaints across the industry, with the 3,379 FOS referrals representing some 30% of all general insurance cases overseen by the ombudsman.

Despite this, the number of motor-related complaints reaching the ombudsman rose by just 0.5%. And this follows a 12-month period where complaint volumes fell year-on-year.

The motor market is also showing signs of improvement when it comes to the number of complaints found in favour of the customer.

Indeed, motor related complaints had an upheld rate of 37% for Q3 2025, down from 44% a year earlier when it had the second highest upheld rate of all UKGI products.

It now has an upheld rate that sits just one percentage point above the market aggregate across all business lines of 36%, which represents a significant improvement for such a large and competitive business line.

“Motor insurance remains the largest source of complaints simply because of its scale, but it is encouraging to see complaint volumes stabilising and upheld rates coming down,” King said.

“For a market of this size and competitiveness, bringing upheld rates closer to the industry average represents meaningful progress. It suggests that operational improvements and claims oversight are beginning to have an impact, even if there is still work to do.”

However, King added that the headline improvement in motor insurance masks significant variation in performance between insurers.

“When we look at the company level data we see some concerning outliers where the ombudsman is siding with the customer in more than half of all motor insurance cases,” he said.

“In fact, more than one-in-10 motor insurers had an upheld rate greater than 50% – and some of these providers are among the biggest players in the market. This is worrying to see and shows the importance of benchmarking in a market where performance can be so varied.”

As with all major lines, the majority of complaints referred to the FOS relate to the claims process, with claims complaints accounting for some 58% of motor cases referred to the ombudsman in Q3 2025. Some 41% of claims complaints are found in favour of the customer.

Motor insurance also has one of the highest proportion of complaints relating to the admin process, accounting for more than a third of FOS referrals, with an upheld rate of 32%.

Across all business lines, claims continues to be the sticking point for the industry.

Indeed, claims-related complaints now account for some 71% of cases being referred to the ombudsman, followed by admin-related complaints, with 22%, and just 7% of cases relating to sales and advice.

Complaints about the claims process have also risen faster over the last 12 months of data, increasing by 15% year-on-year compared to 12% for other complaint types.

King said this shows that claims handling remains the industry’s most persistent structural weakness.

“What the data makes clear is that claims handling remains the dominant driver of complaints across every major line of business,” he said. “Consumer Duty has raised expectations around outcomes, but expectations alone do not resolve operational complexity.

“Insurers that fail to invest in clearer processes, better communication and faster resolution at the claims stage will continue to see complaints escalate to the ombudsman, with both financial and reputational consequences.”