FCA dismisses pleas for renewed Covid BI deadline extension

The FCA has rejected calls from law firm Stewarts and hospitality trade bodies to intervene further on Covid-19 business interruption claims, arguing that additional regulatory action was not appropriate at this stage.

In a letter dated 23 January 2026, the FCA said it would not reinstate its pandemic-era “stop the clock” guidance or require insurers to waive limitation defences on Covid-19 BI claims, despite ongoing litigation and unresolved disputes.

Most Covid-19 BI claims in England and Wales are subject to a six-year limitation period, meaning many unresolved claims will begin to lapse from March 2026 unless court proceedings are issued or standstill agreements are reached.

In December 2025, litigation firm Stewarts and major UK hospitality trade bodies called on the FCA to extend the deadline by two years to March 2028, noting that fewer than 50,000 of an estimated 370,000 potentially valid claims have been accepted by insurers.

The regulator acknowledged the difficulties faced by businesses whose claims were delayed or disputed during the pandemic, but said that since the conclusion of its landmark BI test case, the courts were now the appropriate forum for resolving remaining issues.

Graeme Reynolds, director of competition and interim director of insurance at the FCA, said the regulator continued to supervise insurers against claims handling and Consumer Duty requirements, but had “not seen any evidence that any of the insurers’ behaviour is in question from a regulatory perspective”.

The FCA added that where new court rulings had a potentially beneficial impact for policyholders, insurers were expected to assess whether previously rejected or underpaid claims should be revisited and to explain their decisions clearly and transparently to customers.

However, it said it did not have powers to mandate how insurers conduct litigation or prevent them from relying on lawful limitation defences, including those under the Limitation Act 1980.

Last orders

The regulator also rejected arguments that its previous intervention in the BI test case had created a legitimate expectation that it would step in again, noting that the test case was driven by widespread legal uncertainty at the height of the pandemic.

Responding to the decision, Aaron Le Marquer, head of policyholder disputes at Stewarts, said the FCA’s stance would likely lead to more legal action against insurers.

“It is disappointing that the FCA is declining to take any further action when so many claims remain unresolved. This will undoubtedly increase the volume of litigation against insurers in coming months,” he said.

Le Marquer said it was “helpful” that the FCA had reiterated expectations that insurers revisit claims following future rulings, including the Supreme Court’s forthcoming decision on the deduction of furlough receipts in Bath Racecourse v Liberty Mutual.

However, he warned that policyholders who had not yet submitted a claim needed to act quickly, as limitation deadlines were approaching.

“For those policyholders who have not already made a claim, it is now vital that they review the coverage position with their broker or legal advisor well ahead of 20 March,” he said, adding that brokers should also ensure they had discharged their professional obligations to affected clients.