Consumer harm in the insurance claims process

Executive summary

General insurance products are widely held by UK consumers to protect against things going wrong in their lives. It is vitally important that consumers are treated properly by their insurance provider when they need them most. That might be following a car crash, a flood in their home or when needing medical treatment on holiday.

Which? has raised concerns for some time about how insurance claims are being handled by providers [1]. Our recent analysis of 8,500 Financial Ombudsman Service (FOS) decisions using AI found that 2023 had the highest levels of insurers causing distress and inconvenience in upheld insurance complaints since 2019. We therefore welcome the FCA’s announcement in its latest business plan of two relevant reviews:

• A multi-firm review of how swiftly the insurance industry responds to claims, including where customers are more likely to show characteristics of vulnerability. 
• A review into financial services firms' treatment of customers in vulnerable circumstances, which will report by the end of 2024. 

The Financial Conduct Authority (FCA) has long-standing requirements and guidance on the consumer outcomes that insurers should be delivering when handling insurance claims. Introduced in 2008, the FCA’s Insurance Conduct of Business Sourcebook (ICOBS) requires insurers to handle claims promptly and fairly, and act in accordance with the best interests of its customers. In 2014, the FCA set out how firms should be ensuring that customers in vulnerable circumstances are treated fairly, which was reinforced with detailed guidance in February 2021. These requirements exist within the overall framework of consumer protection law provided by the Consumer Rights Act 2015 [2] and laws against unfair trading, as well as specific rights for consumers in insurance law [3], protecting them if they answer insurers’ questions reasonably and honestly.

The Consumer Duty, which came into force in July 2023, includes specific requirements for firms to support customers and consumer understanding, and sets out the expectation that consumers in vulnerable circumstances should experience outcomes as good as those for other customers. The FCA has made clear that insurers should have already been meeting many parts of the Duty based on existing requirements [4], and that it was a less significant change than for other parts of the financial services sector [5]. 

Despite these requirements, our findings from an online survey of 3,322 people who had made an insurance claim in the three years up to February 2024 and 24 in-depth interviews with people who had made a claim in the same period, show that insurers have in many cases failed to meet the FCA’s requirements. Our research has found:

• Widespread evidence of significant harm caused by insurers’ claims-handling processes. 

• Almost half (48%) of all people making a claim experienced at least one problem in their insurance claim journey [6]. 
• Claims undoubtedly take some time and effort for consumers to complete, but how insurers manage claims can determine the extent of this burden. Over one in four (28%) consumers making a claim felt their insurer’s actions negatively impacted their time available to do other things. 
• One in 10 (10%) had issues sleeping as a result of their insurance claim. 
• 31% said they felt their insurer’s actions negatively impacted their stress levels. 
• One in 10 (10%) said they felt their insurer’s actions negatively impacted their physical health.

• Insurers are failing to consistently ensure that customers in vulnerable circumstances are experiencing outcomes as good as those for other consumers.

• People surveyed who were severely impacted by the incident that led to their insurance claim were more likely to experience problems in their claims journey (63% compared to 33% of people not severely impacted). 
• They were also three times more likely to rate their provider as poor at considering and accounting for any challenges they were facing at the time (30% compared to 9% for those not severely impacted by their incident).
• Almost half (44%) of people surveyed severely impacted by their incident said their insurer’s actions negatively impacted their mental health, compared to just 9% of those not severely impacted by their incident. This is despite the FCA making clear that “firms should take additional care to ensure they meet the needs of consumers at the greatest risk of harm”.

• Insurers are not providing sufficient oversight of how customers are treated where there are third parties contracted to help assess claims or provide remedies. 

• Insurers often use third parties to help assess and resolve claims but this regularly adds complexity and confusion to claims, often leaving consumers doing the legwork to resolve their claim. Claims with third parties were nearly twice as likely to have problems arise (60%) compared to those without them (34%).
• This is despite the FCA being clear that firms should consider how outsourcing to third parties can impact customer outcomes, and consider this as a key risk that could cause consumer harm. This suggests that many insurers that use third parties to assess claims or for remedies are not putting in place sufficient systems and controls to oversee the third parties that they partner with and how this impacts customer journeys.

• Consumer harm is being driven by firms’ poor processes at every stage of the claims-handling process:

Alongside these worrying statistics and some shocking stories, we have also found evidence of good processes and outcomes, which shows that it is possible for insurers to support their customers well, even in the most difficult circumstances. This is evidence that the insurance sector can, and must, do better for consumers.

The FCA already has very clear regulatory requirements of insurers, and it has regularly reminded firms of these via its guidance and communications. We are therefore not proposing any new requirements. Instead, we want to see the FCA holding firms to existing requirements and making sure there are clear penalties for failing to meet them. While we welcome the FCA’s claims-handling and vulnerability reviews, recent FCA reviews in insurance covering compliance with the Consumer Duty and motor insurance payout values have identified major failings, yet have resulted in no announcement of enforcement action. This is further undermining trust in the insurance sector, which has the lowest level of consumer trust of any major consumer-facing industry. Given the prevalence and severity of the harm that our findings have shown, the FCA cannot fail to act on firms’ claims-handling processes. 

We recommend that:

1. The FCA’s vulnerability and claims-handling reviews must lead to robust enforcement action against insurers that are failing to meet its requirements 

2. The FCA must at the very least take action to address:

1. Harm experienced by customers who are in vulnerable circumstances due to the impact of the event that led to their claim
2. Where firms using third parties in their claims process leads to far worse customer outcomes
3. Poor processes that mean firms are not consistently supporting customers to navigate and understand the claims process

3. The FCA should improve its ongoing supervision of insurers’ claims-handling practices to proactively prevent harm from arising

Introduction

Insurance is often a necessity. In some cases, this is a legal obligation: if you drive a car, you are legally obliged to have motor insurance, and buildings insurance is typically a contractual requirement for mortgage holders. In other cases, consumers feel that general insurance policies, including travel, contents and pet insurance products, are essential purchases because of the peace of mind they offer. 84% of UK adults have at least one general insurance product. These products are there to protect us in times of trouble, so it is critical that they deliver as expected when the worst happens and consumers need to make a claim.

The insurance industry has experienced a torrid few years, with challenges brought by the Covid-19 pandemic quickly followed by issues arising from the war in Ukraine and ongoing disruption to global supply chains, alongside rising instances of fraud. Partially as a result of these challenges, insurance customers have faced rising premiums in recent years [7], placing further strain on household finances in the midst of a cost of living crisis. 

Higher prices have not been matched by improvements in customer service, and how customers’ insurance claims are being handled by their providers is an emerging area of concern. The Financial Ombudsman Service (FOS) saw a 22% increase in the number of insurance complaints it received between 2019/20 and 2022/23 [8], with the Financial Conduct Authority (FCA) finding that the volume of complaints specifically relating to claims handling is increasing. Our recent report assessing evidence of consumer harm in FOS decisions found that in 2023, the FOS cited distress and inconvenience caused to consumers in 64% of upheld complaints against insurers. They also found that insurers had caused unfair delays in 38% of upheld complaints. On both measures, this is both the highest number and the highest proportion of harm cited in upheld complaints since 2019.

Unsurprisingly against this background of high prices and apparently poor outcomes, trust in the industry is in the doldrums, as illustrated in Figure 1. Only social media companies are less trusted by consumers in the UK. While other industries have also faced challenges related to inflation and poor customer service recently, trust remains higher, suggesting there are specific issues in the insurance industry undermining consumer trust. 

Figure 1: Insurance is among the industries consumers trust least

 The FCA has recently raised concerns about insurers’ practices in the following two areas: 

• The FCA published findings in March 2024 showing that some insurers reported average settlement values for stolen or written off motor vehicles that were lower than the available guide prices, indicating that some customers’ claims may have received unfairly low payouts. The FCA found that some firms did this with the expectation that they would then increase the offer if the customer challenged the original one or complained, even if the customer provided no additional information. It also said that it is “continuing to directly engage with firms included in this review to ensure that they have addressed our findings.” No enforcement action was announced, despite the FCA finding similar issues in December 2022 and warning firms about these practices. 
• The FCA’s review of larger insurers’ approaches to outcomes monitoring under the Consumer Duty, which was published in June 2024, noted that “we continue to see substandard service levels across insurance sectors”. It also found that “some board or committee reporting contained limited insight into actual customer outcomes”. The FCA did not say that it had taken enforcement action against any of the firms that it had found issues with. It instead told firms that if they identify gaps in their compliance with FCA rules, they should act immediately.

This lack of action against clear breaches of FCA regulations leaves more consumers exposed to harm and risks further undermining trust in the sector. The FCA has not focused heavily on claims handling processes in recent years: it last published a thematic review focused on insurers’ claims-handling processes a decade ago. Its renewed focus is therefore welcome. In March 2024, the FCA announced that it will undertake a multi-firm review which will look at how swiftly the insurance industry responds to claims, including where customers are more likely to show characteristics of vulnerability. It also announced a wider review into financial services firms' treatment of customers in vulnerable circumstances, which will be completed by the end of 2024. These reviews mark a major test of the FCA and in particular the Consumer Duty, which it described as a “major shift” that will “fundamentally improve how firms serve consumers”.

Which? wants to ensure both reviews are well informed and lead to action against any firms falling short of regulatory requirements. This research report therefore aims to show the scale and prevalence of consumer harm from insurers claims-handling practices, and identify what issues and practices the FCA should address.

Methodology

Between November 2023 and February 2024, Which? conducted a two-stage mixed methods research project to explore consumers’ experiences of making home, travel, motor and pet insurance claims. 

We sought to understand what creates a positive or negative experience for customers, and to uncover patterns, themes and situations where customers face emotional, financial, time and physical harm caused by their insurer’s behaviour during the claims process. The research was focused on how well or badly insurance firms are managing the claims process and did not attempt to assess whether the eventual outcome was fair.

We began this project by conducting 24 in-depth interviews with people who had recently made a claim. This stage of the project built a detailed understanding of consumers’ experiences in the claims process. An online survey of 3,322 recent insurance claimants was then conducted in February 2024 to identify the prevalence of the positive and negative experiences identified in the interviews stage. The results were weighted to be nationally representative of UK adults who have made a claim in the last 3 years. More detailed information regarding the research methodology can be found in the annex to this report.

Both stages of the project include insurance claims made in the last three years (i.e. since the start of 2021). This means that some of the claims-handling journeys included in our research pre-date the introduction of the FCA’s Consumer Duty, which has been in force since July 2023. However, our analysis of firms’ failings is also based on other regulatory rules and guidance, including the FCA’s 2008 Insurance Conduct of Business Sourcebook (ICOBS) and its 2021 vulnerability guidance. The FCA has also been clear that insurers should have already been meeting many parts of the Duty based on its existing requirements [9], and that it was a less significant change than for other parts of financial services [10]. 

Names in this research report have been changed to protect the privacy of our participants. We would like to thank them for their contribution to this research project and the time they took to tell us their stories. 

Outline of report

Chapter 1 of this report provides an overview of consumers’ experience of making insurance claims. It covers the steps involved in the process, current requirements and guidance for insurers, common problems that arise and the impact these problems have on people. 

Chapter 2 looks at the experiences of people with specific challenges when making their claim and who display characteristics indicating possible vulnerability, and compares these individual’s experiences to others.

Chapters 3 to 5 of this report explores in more detail the three main stages of an insurance claim: 

1. The claimant reporting the incident
2. The claimant providing information and evidence about the claim
3. The insurer determining and communicating the outcome of the claim

In these chapters we outline what the current requirements on insurers are and whether they are currently following these requirements based on our research findings, highlighting both good and poor practice. 

The report ends with Chapter 6, a summary of our findings and our recommendations to the FCA.

Chapter 1: Consumers’ experiences of making claims

Consumers take out general insurance policies to protect themselves financially in case they experience an incident with their home, vehicle, holiday or pet. We all hope that nothing goes wrong with these things. Unfortunately though, sometimes unexpected disasters strike.

Incidents that trigger insurance claims are often unexpected, traumatic and cause significant disruption to people’s day-to-day lives. The last thing people need at this point is for their insurance claim to be a difficult and stressful process, and while complexity may be inevitable in some cases, the behaviour of insurers can make a big difference to consumers’ experience at a challenging time. 

The insurance claims journey

This research project sought to uncover consumer experiences across three main stages of the insurance claims journey:

1. The claimant contacting the insurer and reporting the incident
2. The claimant providing information and evidence about the claim to the insurer
3. The insurer determining and communicating the decision

Figure 2 outlines these three stages.

Figure 2: Process of an insurance claim

Where consumers are unhappy with the outcome of their claim or the process, they have the right to seek redress, first by complaining to their insurer, and then through the Financial Ombudsman Service if they are still dissatisfied. 

What should insurers be doing when handling claims?

In addition to complying with general consumer protection laws, the FCA has stringent requirements and detailed guidance outlining how insurers should support their customers when handling their claims. Rules on claims-handling have been set out in the Insurance Conduct of Business Sourcebook (ICOBS) since 2008, and the consumer outcomes all FCA-regulated firms are expected to deliver under the Consumer Duty have been in place since July 2023. This is supported by the FCA’s 2021 guidance on how firms should treat their customers in vulnerable circumstances, and regular communications to the insurance industry i.e. ‘Dear CEO’ letters, in which the regulator has clearly set out its expectations on how firms should effectively embed the Consumer Duty into the General Insurance sector [11].

Table 1 summarises some of the key principles insurers should follow when handling their customers’ claims, as set out in the FCA’s requirements and guidance for firms.

Table 1: Some of the key principles insurers should follow when claims-handling, from the FCA’s ICOBS, Consumer Duty, ‘Dear CEO’ letters and vulnerability guidance

However, regulatory rules and guidance are worthless if they are not followed and enforced by the regulator. Our research uncovered extensive evidence that consumers are encountering an array of problems during the claims process. 

Problems during the claims process

Our in-depth interviews with people recently making a claim showed that not all claims follow the neat linear trajectory outlined Figure 2. Instead, for many consumers the insurance claims journey can be a complex process, fraught with problems and many twists and turns. The most common issues identified in our survey related to the later stages of the claims process, with consumers experiencing delays hearing the outcome of their claim, needing to chase their insurers for an update and being asked to repeat information multiple times. Further information on each of these issues is provided in Chapters 4 and 5.

Our survey found that, despite the majority of UK insurance claimants being satisfied overall with how their provider handled and processed their entire claims process (73% satisfied, 16% dissatisfied), almost half (48%) of all consumers experienced at least one problem in their insurance claim journey, and more than a quarter (27%) experienced at least three problems. These problems were not confined to claims with unfavourable outcomes; over one in three (36%) people surveyed who had their claim fully accepted experienced at least one problem. Unsurprisingly, consumers who were dissatisfied with the handling of their whole claims process are significantly more likely to have experienced problems at every stage, showing that these issues have an impact on consumers’ overall experience of the process. 

Not all claims can be straightforward and follow a simple, linear process, but the FCA’s rules should ensure that the vast majority of consumers have a reasonable claims experience. Nearly half of customers experiencing some kind of issue suggests that standards across the industry are not where they should be. As we will explore in further depth through the rest of this report, our research suggests that firms are failing to consistently meet regulatory expectations at points throughout the claims journey, leaving consumers experiencing significant detriment as a result. 

Consumer harm in the claims process

It might be argued that insurers can’t be expected to be perfect and some challenges in a consumer-facing industry of this scale are inevitable. There may be some truth in this, but our research suggests that these issues are causing significant harm to consumers, which should motivate action. 

The most prevalent harms people are experiencing when making insurance claims are time harm, when they spend hours dealing with their claim, and emotional harm, in the form of frustration and distress.

These harms often come hand in hand; people having their time wasted can result in frustration, while stress and anxiety can impact on their ability to focus on other things. Taken together, they can have a major impact on consumers' everyday lives as they go through an insurance claim. These harms can be especially damaging when claims drag on for a long period of time. Where claims took longer than three months to complete, 61% of people said their claim took up a lot of time and effort and 42% felt anxious or stressed as they waited to receive an outcome. 

While less common, some people making claims experienced much deeper emotional harm or even physical harm.

More problems, greater harm

Consumers who experienced multiple problems during their claims were much more likely to report negative impacts on their time and health. As shown in Figure 3, amongst the 27% of claimants surveyed who experienced three or more issues while making their claim:

• 61% reported their claim took up a lot of their time and effort
• 50% felt anxious or stressed as they waited to receive an outcome
• 24% had issues sleeping as a result of their insurance claim.

This highlights the importance of insurers to adequately manage consumers’ claims, mitigating against problems arising that are causing pervasive harm.

Figure 3: Impacts of the claims process by the number of problems experienced

Chapter 2: People experiencing challenges and displaying characteristics of vulnerability

Figure 4: Characteristics of vulnerability amongst people making insurance claims

As shown in Figure 4, not everyone enters the insurance claims process on the same footing. In our survey, over a third (36%) of people making a claim had a health condition [12] that could impact their ability to go about their day-to-day life, which might also have made managing their claim harder. Almost one in five (18%) also have either dyslexia, low self-rated numeracy skills, low knowledge of financial services or ability to use the internet, or limited educational qualifications which could limit their capability to engage with financial services [13] and navigate the claims process with confidence. 

In addition to these well-understood sources of potential vulnerability, some people making insurance claims will have experienced highly distressing and complex incidents that have a major impact on their stress levels or on their ability to go about their daily routine. In our research we found that one in three (34%) people making a claim were severely impacted by the incident their claim related to, reporting that the incident impacted either their stress levels, mental health, physical health, financial wellbeing or ability to go about their day-to-day life ‘a lot’. This level of stress may put people in a psychologically vulnerable state, with a reduced cognitive capacity to deal with more stressors, meaning challenges which would usually be manageable can cause emotional distress [14]. The FCA specifically recognises this low emotional resilience as a potential driver of vulnerability. 

These circumstances and characteristics can make consumers “especially susceptible to harm, particularly when a firm is not acting with appropriate level of care”. The FCA expects insurance firms to identify the needs of vulnerable consumers and provide appropriate support, to ensure they receive good outcomes from their claims journey.

Concerningly, our survey found that consumers who were severely impacted by the incident their claim related to were nearly twice as likely to experience at least one problem during the claims process as those who were not impacted in this way, as illustrated in Figure 5. Nearly two-thirds (63%) of people who were severely affected by the incident their claim related to experienced at least one problem with their claims process, suggesting insurers may systematically be failing to meet the expectations outlined in the FCA’s vulnerability guidance and to offer adequate support to people experiencing challenges and displaying characteristics of vulnerability.

Figure 5: Problems experienced by people making a claim dependent on the extent of their incident

Those surveyed who only had a health condition or lower capability were not any more likely to experience problems during the claims process. For example: 

• 41% of consumers with a health condition that could impact on their ability to make their claim had problems, compared to 44% without a condition
• 44% of consumers with lower capabilities experienced a problem, compared to 43% of other claimants.

However, those who were severely impacted by their incident and had either a health condition or lower capability were more likely to be dissatisfied with their whole claims process, even more so than those just severely impacted by their incident (Figure 6).

Figure 6: Proportion of claimants dissatisfied with the handling of their claim by characteristics of vulnerability

Harm amongst people with characteristics of vulnerability

People making a claim with characteristics of vulnerability are likely less resilient to be able to deal with problems when they occur and may be more susceptible to harm. It is therefore unsurprising that we saw the group who were more impacted by the incident that led to their claim also experienced harms more frequently and more severely.

Almost half (44%) of consumers severely impacted by their incident said their insurer’s actions negatively impacted their mental health, compared to just 9% amongst those not severely impacted by their incident. One in five (22%) people severely impacted by their incident said they experienced emotional distress having to repeat traumatic details surrounding their claims, compared to just 2% amongst those not severely impacted by their incident. 

One in three (32%) consumers surveyed experiencing mental health problems felt their insurer’s actions negatively impacted their mental health.

This demonstrates a failure of firms to ensure their customers who show characteristics of vulnerability receive good outcomes from their insurance product in terms of their claims process experience. One rebuttal by insurers to these findings may be that claims where customers were severely impacted by their incident are by their very nature more likely to have problems because their claims are likely more complex. However, we do not feel this is an adequate response. The FCA is very explicit that “firms should take additional care to ensure they meet the needs of consumers at the greatest risk of harm”. These consumers severely impacted by their incident are more likely to require support and the fact that they are running into more problems in their journey shows that firms are not doing enough to ensure they receive good outcomes.

This echoes findings of the FCA’s recent multi-firm review of outcomes monitoring under the Consumer Duty, which also identified firms failing to consistently monitor outcomes experienced by different groups of consumers, including those with characteristics of vulnerability, leading to consumers experiencing foreseeable harm - despite the fact that guidance on the fair treatment of vulnerable consumers has been in place since 2021. 

Chapter 3: Reporting the incident

The first point of contact is a crucial time in the claimant’s journey. After an incident, people typically experience moments of distress or precarity. On top of this, making a claim is often a novel experience. Almost half (44%) of people making an insurance claim have never made any type of insurance claim before, and our research participants reported experiencing anxiety about how the process would work. 

“I wasn’t too sure of the process of the whole thing. I was worried that the process was going to be long, and thought, ‘Is it going to be complicated’?”

The way insurers behave during the initial contact can make a big difference to how people feel about their claim. Insurers who:

1. take the time to hear and understand the customer’s situation;
2. respond to the customer’s circumstances and needs; and
3. provide clarity on the claims process,

help to reduce the uncertainty people experience and manage related anxieties. 

This also sets the groundwork for the subsequent stages of the claim. In this chapter we explore what it looks like in practice for insurers to offer this support, and the consequences for consumers when this is lacking.

Insurers are failing to listen to and understand the customers’ situation

During the initial contact, people making claims provide information regarding their incident, such as a description of what happened. When people are facing difficult circumstances, empathy from the person they are speaking to can go a long way to make them feel like they are being listened to.

Three in 10 (29%) consumers making a claim rated their provider as excellent at taking the time to hear and understand their incident. However, our respondents commonly reported feeling that insurers are often failing to listen to them. 

“About an hour later, I got called back from the claims department. I literally felt like I was being interrogated.”

Listening carefully to customers making a claim is vital, as it is at this point that insurers should be seeking to identify indicators of vulnerability that they may need to respond to through the claims process. This is particularly important in insurance, where a firm is likely to have had limited contact with and information about their customer prior to a claim being initiated. The FCA requires firms to properly understand and effectively respond to the needs of their customers in vulnerable circumstances: 

Tara’s case offers a clear example of this guidance not being followed.

This absence of empathy can be especially damaging for vulnerable consumers at already distressing points in their lives. People severely impacted by their incident were over three times more likely to rate their provider as poor in taking the time to understand their incident (17% compared to just 5% of those who were not severely impacted) (Figure 7). Over half of these people felt that their insurer’s actions throughout their claim negatively impacted their stress levels “a lot” (56%).

Figure 7: Consumers who experienced incidents which had a greater impact on them were more likely to be dissatisfied with their initial contact with their insurer

Customers’ circumstances and needs are often not being accounted for

Where appropriate questions are not asked to identify potential vulnerabilities, or these are not correctly recorded, firms cannot respond with appropriate steps to provide support to customers. It is expected that insurers support their customers’ additional needs throughout the claims process:

In some cases, firms are correctly identifying and responding to their customer’s needs. Karen was really impressed by the initial conversation she had with her insurer. 

In this claim, the staff member Karen spoke to had the appropriate skills and capability to understand and take into account her needs when she initially reported her incident. 23% of consumers making a claim rated their insurer excellent at considering and accounting for any challenges they were facing at the time and 36% rated them good. This is a clear example of good practice in line with the Consumer Duty. 

However, we also uncovered evidence that insurers are consistently failing to respond appropriately to potential markers of vulnerability. Three in 10 (30%) consumers surveyed who were severely impacted by the incident which led to their claim rated their provider as poor at considering and accounting for any challenges they were facing at the time. This is three times higher than those not severely impacted by their incident (9%) (Figure 8). 

Figure 8: Those severely impacted by their incidents were three times more likely to be dissatisfied with their insurer meeting their needs

Revisiting Tara’s case offers a clear example of where an insurer failed to respond appropriately to a customer’s vulnerability.

These interactions caused Tara significant distress and eventually she settled her claim just to find some closure. Her case demonstrates a clear failure to follow the FCA’s vulnerability guidance, specifically to ensure information about vulnerabilities is recorded to avoid consumers having to repeat themselves, and so appropriate support can be provided on an ongoing basis.

People experience uncertainty from a lack of clarity in the claims process

After insurers have heard about the incident, assessed possible vulnerabilities and identified appropriate support for the customer, they should clearly explain the claims process, helping to manage the customer’s expectations and reduce uncertainty. The FCA expects insurers to support consumer understanding throughout the claims process, including at the point of initial contact:

Often, insurers are meeting the FCA’s expectations on supporting consumer understanding through providing clarity on the claims process, as in Carrie’s case.

More than half of people making a claim have positive experiences akin to Carrie. One in four (26%) consumers rated their provider excellent for clearly explaining what the claims process would involve when they first contacted them, and 32% rated them good. Their experiences are clear examples of good practice in line with the FCA’s Consumer Duty. 

However, one in four people making a claim said that their initial contact did not leave them feeling clearer or more certain of their situation (26%). This uncertainty creates ongoing anxiety, and can worsen perceptions of the whole claims process: over 4 in 10 (44%) of these consumers who did not have a good initial contact ended up rating their whole claims experience as poor. 

An important aspect of providing clarity is using language that people can understand. In its Consumer Duty, the FCA requires firms to ensure their communications are likely to be understood by their customers and support them in making effective decisions. It asks firms to avoid jargon or technical terms where possible, and to explain the meaning of key terms in simpler terms to help to build consumers’ trust. When these steps aren’t followed, as in Jill’s case, it can damage people’s confidence and likely make the claims process harder for both the insurer and their customer.

The initial contact is a crucial first step in the claim process. This research has shown that when done well it fosters understanding for both parties; insurers understand their customer’s circumstances and needs, enabling them to respond appropriately, and customers understand what is required of them and how the process works. When these steps are not followed it can set a poor foundation for the rest of the claim, exacerbating the potential for further problems arising in the claims process.

Chapter 4: Providing information and evidence about the claim

People making a claim often need to provide further information about their incidents for their insurer to assess and process their claim. This can involve the submission of evidence proving the nature of the loss, for example receipts, doctor’s reports or police crime numbers. Consumers might need to pay for this evidence, and will almost certainly have to spend time gathering relevant documents. 

Our research uncovered that consumers are encountering a number of challenges at this stage of the insurance claim:

1. When either answering insurers questions or submitting evidence, consumers are too often being asked for the same information on multiple occasions or being asked for more and more information over a long period of time. This makes this stage feel repetitive.
2. Consumers are occasionally not being clearly informed what and why they need to send certain evidence.
3. Insurers may not be supporting the diverse needs of their customers, resulting in some consumers struggling to submit their evidence.

 In this chapter we explore the consequences of these issues, and how insurers can avoid them.

Many consumers experience repetitive or sequential requests for evidence

It is hugely frustrating when consumers are asked repeatedly for similar things over and over. It erodes their trust and confidence in the other party’s ability to properly carry out a task. The FCA expects insurers to ensure their customers don’t face unreasonable barriers when making a claim, and to reflect on how their actions can impact their customers in vulnerable circumstances:

Repetitive questions or evidence requests could be seen as falling foul of this guidance. One in five (21%) people making a claim had to repeat information or repeatedly share documentation and evidence multiple times during their claims process. This is an unreasonable barrier that can make it harder for people to get a fair outcome from their claim. 

People making a claim also reported evidence requests coming in dribs and drabs, resulting in them spending more time gathering this information. 16% of those submitting evidence were asked to provide additional evidence following their initial submission.

Repetition and sequential requests are a great inconvenience to consumers, causing frustration. One in five (22%) people said that going through their claim took up a lot of their time and effort and 28% felt their insurer’s actions negatively impacted their time available to do other things.

“That is when they just want me to repeat again exactly what happened. It makes you feel like how long is this going to go on for if they keep asking the same questions? Obviously I expected to be questioned because again, it's a financial service, so they needed to get the details and I sent everything I had. I expected to send paperwork… But having the same conversation three times I thought was well over the top.”

Repetition can be especially damaging to customers who show characteristics of vulnerability, like Sam.

The continual, repetitive requests put a big strain on Sam’s family while his dad was going through recovery, which was already a very stressful time. If the insurer had been upfront about all the documentation and information he had to supply at the start of the process and recognised the stress and vulnerability his family was experiencing, the harm they experienced could have been significantly reduced.

In some cases repetitive requests have even more serious consequences. Having to repeat very personal or traumatic details surrounding their claims can directly cause emotional harm to consumers. More than one in three (35%) consumers surveyed who had to repeatedly share documentation and evidence said they experienced emotional distress having to repeat traumatic details surrounding their claims. Often these were people who were in vulnerable circumstances. 

“I’m looking over things that belong to my husband, it’s sad, it’s upsetting, it is triggering all the time”

Insurance firms must do more to avoid asking their customers for the same evidence or information repeatedly, particularly customers in vulnerable circumstances.

Not all evidence requests are reasonable and proportionate

 Additional problems can arise when customers have to send evidence. Collecting evidence can often be very time consuming for people, requiring a trip to the doctors, or digging through years’ worth of receipts, for example. Sometimes these requirements can feel unreasonable, intrusive or disproportionate. This can make the person feel significantly more anxious. 

Lydia had to make an insurance claim after her father-in-law’s heart attack, which meant they had to cancel a family holiday. Her story demonstrates the harm that unreasonable requests can cause to consumers.

Insurance firms should not be making unreasonable evidence requests to their customers which can take a lot of time or feel overly intrusive. Instead, firms should ensure that all requests are reasonable and use appropriate communications to help deliver good outcomes for their customers at the evidence collection stage.

Diverse customer needs are not being recognised when insurers are asking for evidence

In Chapter 3 we saw that insurers sometimes fail to recognise and respond to people’s circumstances when they first make a claim. This can cause further issues when people are tasked with collecting and submitting evidence related to their claim. We identified particular issues for consumers who are not comfortable using the internet, with some insurers insisting evidence is submitted through an online portal, despite clear FCA guidance that lower capability in areas such as digital skills is a key driver in increasing a customer's risk of becoming vulnerable and that appropriate support should be offered in these cases. 

We uncovered evidence of insurers sometimes adopting a one size fits all approach that leaves some customers struggling to derive value from their products. Revisiting Tara’s story from Chapter 3, we see that her insurer again failed to understand her needs, this time in terms of her ability to use the internet to collect and submit evidence. 

Our research suggests that while not common, this is not an isolated occurrence. One in 10 (11%) consumers surveyed who had to submit evidence said they had difficulties sending it (e.g. navigating an online portal). These experiences often lead to further stress for people making a claim. Over three in four (78%) of those who experienced a problem at the evidence stage said they felt their stress levels increased because of these difficulties.

This research has shown that too many consumers are encountering time consuming and frustrating problems during the information and evidence stage of insurance claims, even though the FCA guidance clearly specifies that customers shouldn’t face unreasonable barriers to making and progressing their claim. Consumers are having to repeat details of their claim again and again, receiving evidence requests in dribs and drabs, and not being offered appropriate support to submit evidence; all unnecessary and avoidable barriers to fair outcomes. 

Chapter 5: Determining and communicating the decision

Once all information and evidence is finally received, insurance companies determine the appropriate course of action to resolve the claim. The insurance company then informs the policyholder about the decision or resolution of their claim. 

Our research revealed three common challenges experienced by consumers during the remedy stage:

1. Customers are left in the dark or experience unreasonable delays when waiting for their claim’s decision.
2. Third party involvement adds complexity and exacerbates problems.
3. Many consumers with unfavourable outcomes do not understand the reasons behind their reimbursement decisions.

Customers are left in the dark or experience unreasonable delays when waiting for their claim’s decision

In an ideal world, all claims would be resolved promptly to minimise the anxiety and inconvenience consumers may experience while waiting for their claim to be processed. While some claims will inevitably be more complex and take a little longer to resolve, clear communication about the progress of the claim can go a long way to help consumers understand their position and to manage expectations. The FCA rightly acknowledges in its guidance that “some claims may take longer to settle than others”, but it nonetheless makes clear that “firms should ensure they manage customers’ expectations throughout the claim journey by providing timely and appropriate communications.” The FCA also makes clear that firms should avoid unreasonable delays and settle claims promptly.

Many of the most prevalent problems we identified in the claims process revolved around customers having to chase their insurer:

• 20% of customers had to chase for information on the status of their claim;
• 14% felt they had to chase in order to make the claim progress;
• 17% felt there were time delays in their insurer communicating the decision; and,
• 16% felt they had to chase in order to hear the outcome.

This research could not discern if the delays people viewed as unreasonable were a failure of insurers to assess and settle claims within a reasonable time as we did not speak to insurers about these specific claims. However, we can be clear from our evidence that many firms failed to keep their customers adequately informed about the progress of their claims. 

Chasing insurers can take up a lot of people’s time and energy, and disrupt their ability to do other things in their lives. Over one in five (22%) people making an insurance claim said they felt their insurer’s actions negatively impacted their ability to go about their day to day life. In addition, delays to receiving a claims outcome can impact a consumer’s financial situation if they are waiting to be reimbursed for costs they incurred.

These are not the only consequences of delays and more severe harm can result, depending on the nature of the claim. For example, where a claim relates to damage to a person’s home, delays can even cause physical harm to consumers: Diane experienced serious health problems when her insurer took two months to rectify damp problems following a leak in her home. 

In the boxes below we compare Diane’s experience to Carrie’s. Both had leaks which caused water damage to their homes and required urgent attention. Comparing these two experiences showcases the importance of insurers having systems in place to avoid delays.

Carrie’s insurer managed her claim well; this reassured her and made sure she could proceed with her claim without facing unreasonable barriers. Carrie’s story shows how delays in the claims process can be avoided and that experiences such as Diane’s should not be accepted.

Third parties involvement adds complexity and exacerbates problems

 One significant driver of delays in the claims process is the involvement of third parties. Third parties are often involved in insurance claims when insurers choose to outsource part of the process or specific expert input is required. This often occurs at the stage where a decision is being determined, for example with a garage having to assess the damage to a car, but can also include making repairs. One in four people surveyed making a claim  said that part of their insurance claim was managed by a third party (25%).

The involvement of third parties can add a layer of complication, a factor explicitly recognised by the FCA in the Consumer Duty:

Our research identified specific issues where consumers were not expecting third party involvement or were unclear on the third party’s role, which appeared to contribute to delays. 

As shown in Figure 9, consumers surveyed who said that part of their insurance claim was managed by a third party were almost twice as likely to report problems during their insurance claim. These people were also twice as likely to report having an overall negative insurance claim experience (23% compared to 11% amongst claims with no third parties). Often these problems were directly related to the third party’s involvement. Amongst claims involving third parties:

• 17% of consumers surveyed said it was not clear what the insurers and third parties roles were in their claim
• 17% said there was poor communication between insurer and third parties
• 14% received conflicting information from their insurer and the third party
• 12% were not told why the third party were involved in their claim

Figure 9: Claims with third parties had more problems

Latasha had a minor car accident, which damaged the bumper on her car. She expected to have a relatively swift claims process with her car being fixed by a garage. In reality, however, the process was protracted, with a multitude of problems related to third party involvement.

Latasha’s story demonstrates a clear failure by her insurer and third party to effectively communicate, resulting in Latasha receiving conflicting information and her having to be the one to manage and progress the claim. This destroyed Latasha’s confidence in motor insurance to the extent that she is no longer able to drive, creating an enduring negative impact on her daily life.

A lack of clarity about third party roles can cause delays to arise, with neither the insurer nor third party progressing the claim. As a result, consumers reported feeling neglected. This can be particularly challenging for consumers in vulnerable circumstances, like Karen.

While third parties are often a necessary and unavoidable part of the claims process, our research suggests their involvement regularly adds complexity and confusion to claims, often leaving consumers feeling they need to chase parties and do the legwork to resolve their claim.

Many consumers with unfavourable outcomes do not understand the reasons behind their reimbursement decisions

Once consumers receive their insurer’s decision regarding their claim, it is crucial that they understand the reasons for the decision, especially if the claim is not fully accepted. Sometimes claims will rightly be rejected, or only accepted in part, however it is important that consumers understand the reasoning behind this so they can challenge it. if necessary, to ensure they obtain a fair outcome. The FCA requires firms to make fair decisions regarding reimbursement, and has several expectations on insurers as to how they should communicate important information so that it is understood by consumers:

Despite these expectations, we uncovered evidence of insurers often failing on this front. We found that people can experience further harm through frustration, confusion or anger when insurers are unclear about why the decision has been made. 

We found one in four consumers surveyed whose claim was either only partially accepted or rejected said they were not given a reason why (24%). Almost two thirds (63%) of people who said they were not told why their claim was partially accepted or rejected left their insurance journey feeling that the decision was unfair. While the decision may have been fair and in line with the product’s terms and conditions, if the consumer does not understand the reasoning and is not able to challenge the decision or access redress as a result, this cannot be said to represent a good outcome for the consumer. 

Complaints processes can involve similar harm to the rest of the claims journey

Most insurance claims journeys end once they have received their insurer’s decision. However, some people choose to complain if they are dissatisfied with the outcome or the process, and this is an important step in ensuring consumers have access to fair outcomes. One in 10 (10%) people making an insurance claim made a complaint to their insurer (e.g. disputing the insurer’s decision or seeking compensation over the poor handling of their claim). If the claimant is not satisfied with the insurer’s response, they can escalate their complaint to the FOS. One in five (20%) of insurance claimants surveyed making a complaint said they then took it to the FOS. 

This research project was focused on the core insurance claims process and did not seek to cover the complaints process in detail. However, we did find that going through the complaints process often involves rehashing many of the steps in the claims journey, with consumers experiencing similar problems and harms at this stage. 

People will usually only enter a complaint if their outcome was undesirable so they already feel frustrated, upset and potentially unfairly treated. In addition, there is often a heightened sense of anxiety that a resolution has not yet been reached and the complaints process can then take many months. Almost half (48%) of those surveyed making a complaint said that going through this took up a lot of their time and effort, and one in five (21%) even had issues sleeping as a result of their insurance claim. This underlines how important it is that insurers treat their customers properly to begin with and, as expected by the FCA, take proactive and reactive steps to avoid causing harm to customers. 

This chapter has shown that many issues occur at the decision stage. The most common of these are delays in the lead up to a decision. The involvement of third parties can result in delays, as well as other issues that culminate in consumers having to do the legwork in progressing their claim. When people receive their decision, many are not provided with adequate information to help them understand the reasoning behind their settlement, limiting their ability to challenge the decision or seek redress.

Chapter 6: Summary and Recommendations

We have found widespread evidence of significant harm caused to consumers by insurers’ claims-handling processes, where FCA rules and guidance are not being consistently followed. These can be grouped into three main categories of issues: 

1. While most consumers have a positive experience of the initial step of reporting their incident to their insurer, too often the chance to identify vulnerability and offer appropriate support is being missed. In particular, we have identified that insurers are regularly failing to identify and respond appropriately to consumers experiencing low emotional resilience because of the incident which led to their claim. This is despite clarity in the FCA’s vulnerability guidance that firms should understand what characteristics of vulnerability are likely to be present in their customer base, and take additional care where necessary. 

2. We also identify a range of process issues where firms are not consistently meeting FCA requirements.

• Firms are not consistently offering consumers a clear explanation of the different stages of the claims process and possible timelines when the customer initially contacts them, making it harder for consumers to know what is reasonable and to access fair outcomes later. This is leaving consumers having to spend lots of time chasing their insurers to get an update on the progress of their claim, which is a common source of frustration. 
• Further exasperation is caused when, too often, firms ask consumers to provide the same information multiple times, for evidence which is not proportionate or reasonable, or ask for multiple pieces of evidence over a period of time which slows the process down, resulting in delays for the customer. This is particularly problematic where insurers are asking people to repeat information relating to traumatic incidents, causing significant emotional distress. 
• We also find that insurers are increasingly expecting all customers to use online portals to upload evidence, and not offering alternatives quick enough where consumers with lower digital skills struggle to access these. These issues frequently cause delays. 
• And, after these process challenges, when a decision finally is reached, insurers are not consistently ensuring that their customers understand the reasons why a claim is being denied or only settled in part, reducing their ability to challenge this decision and access a fair outcome.
• Overall, insurers are simply not being sufficiently proactive in supporting their customers through the claims process as the FCA clearly expects, which is resulting in consumers experiencing foreseeable harm in the form of frustration, wasted time and in some cases emotional distress or physical harm. 

3. Finally, we have identified particular issues in cases where insurers are using third parties to complete part of the claims process. Inadequate communication between third parties, insurers and customers is leaving consumers facing significant delays and frustration. The FCA is clear in the Consumer Duty that interactions with third parties can be a specific source of detriment to consumers; our evidence suggests insurers are not currently taking sufficient steps to mitigate this risk when using third parties.

While our findings show the prevalence and nature of the problems consumers are facing in the claims process and the harm it is causing, we have not shown firm-level findings because our sample sizes are not sufficient to compare firms fairly nor have we reviewed individual firms’ claims-handling practices. It is now down to the FCA to examine which insurance firms are failing to meet its rules, why this is happening and to take action to address these failures. In doing so, the FCA should also look at the evidence we have found of good outcomes, which shows that it is possible for insurers to support their customers even in difficult circumstances, where insurers are responding to events that have severely impacted their customers and where claims are difficult to assess and respond to. 

We are not proposing any new regulatory requirements. Instead, we want to see the FCA hold firms to existing requirements and make sure there are clear penalties for failing to meet them. While we welcome the FCA’s claims-handling and vulnerability reviews, recent FCA reviews in insurance covering compliance with the Consumer Duty and motor insurance payout values have identified major failings but resulted in no announcement of enforcement action. This is further undermining trust in the insurance sector, which has the lowest level of consumer trust of any major consumer-facing industry. Given the prevalence and severity of the harm that our findings have shown, the FCA cannot fail to act on firms’ claims-handling processes. 

We recommend that:

1. The FCA’s vulnerability and claims-handling reviews must lead to robust enforcement action against insurers failing to meet its requirements

We welcome the FCA’s reviews of firms' treatment of customers in vulnerable circumstances and of how swiftly the insurance industry responds to claims. Both reviews must properly reflect the breadth of issues and scale of consumer harm that we have uncovered in this report. With the harms from poor claims-handling having a significant impact on people’s lives and the regulatory obligations on insurers having been clear for many years, this multi-firm work must also be urgently prioritised by the regulator.

We expect this review to lead to robust enforcement action against insurers that have not put in place the necessary governance, systems and processes to meet the FCA’s current requirements. Enforcement action from the regulator is crucial to tackling these widespread failings, which are based on people’s experience of insurance claims over the past three years. 

In considering what remedial and preventive action it takes, the FCA should consider the need to provide a deterrence against future failures to meet its regulatory requirements and guidance. The FCA should learn from the failed warning it issued to firms to stop offering settlement values lower than a fair estimate of the consumer’s vehicle market value, which was not sufficient to prevent some insurers continuing to break these rules. The FCA’s enforcement action should also reflect the power imbalance that consumers face when making insurance claims. Consumers cannot be expected to be sufficiently familiar with the claims process to understand what they can reasonably expect, as our findings show, and also often do not know why their insurance claim has been rejected, which makes it much harder to challenge their insurers’ actions. On this basis, the FCA cannot leave it to consumers to challenge inappropriate behaviour on the part of insurers and seek redress, and must take prompt action to proactively prevent consumer harm. 

2. The FCA must at the very least take action to address:

i) Harm experienced by customers who are in vulnerable circumstances due to the impact of the event that led to their claim

Many people enter the claims process in vulnerable circumstances due to the event that led to their claim. This is not a surprise and insurers’ processes should be designed for this. However, we have found that people in vulnerable circumstances due to the incident which led to their claim were almost twice as likely to experience problems in their claims journey (63% compared to 33% of people not severely impacted). This is despite long-standing FCA guidance for firms to identify and support customers in vulnerable circumstances. The FCA has further strengthened these obligations with the introduction of the Consumer Duty, which requires firms to ensure that people in vulnerable circumstances are experiencing outcomes as good as those for other consumers. Our findings show clearly that insurers have failed to do this over claims made in the past three years. This is a shocking failure by many insurers to meet FCA requirements. How the FCA now responds marks an early test of whether the Consumer Duty is delivering what the FCA claimed it would. 

ii) Where firms using third parties in their claims process leads to far worse customer outcomes 

Insurers often use third parties to help assess and resolve claims. This can include specialist loss adjusters who assess damages to buildings, tradespeople to repair homes or mechanics to provide motor vehicle repairs. In many cases this will be an economic necessity for firms, whereas in some cases firms may choose to outsource processes, which can even include customer-facing operations. The FCA is clear that firms should consider how outsourcing to third parties can impact customer outcomes, and it identifies this as a key risk that could cause consumer harm. However, we have found that claims involving third parties are much more likely to have problems arise and make the claimant feel dissatisfied with the handling of their claim. This suggests that many insurers that use third parties to assess claims or for remedies are not putting in place sufficient systems and controls to oversee the third parties that they partner with and examine how this impacts customer journeys. 

iii) Poor processes that mean firms are not consistently supporting customers in navigating and understanding the claims process 

The Consumer Duty includes requirements for firms to support customers and consumer understanding but we have found a wide range of issues throughout claims processes where in many cases firms are not doing enough. This is very often, making the claims process more arduous than it needs to be, adding unnecessary emotional, time and in some cases physical harm. It can also make the person’s situation even worse, precisely when people need them most to help resolve an issue in their life. 

There can of course be challenges that arise when handling claims. The FCA rightly acknowledges in its guidance that “some claims may take longer to settle than others”, but it nonetheless makes clear that “firms should ensure they manage customers’ expectations throughout the claim journey by providing timely and appropriate communications.” 

One example of poor processes directly causing harm is whereby customers have to unnecessarily repeat traumatic details of events, causing emotional distress. The FCA’s vulnerability guidance is clear that “consumers should not have to repeat information" and that firms should have systems and processes in place to respond to the needs of consumers in vulnerable circumstances. 

The FCA must tackle poor processes from firms that fail to:

• Clearly explain the different stages of the claims process and expected timelines.
• Ensure all evidence requests are reasonable, proportionate, not repetitive and made in a timely fashion.
• Tailor their claims-handling processes to the diverse needs of their customers and provide additional support where required.
• Update their customers about the progress of their claim, including how they are addressing any issues that have arisen.
• Clearly explain why they have rejected or partially rejected a claim.

3. The FCA should improve its ongoing supervision of insurers’ claims-handling practices to proactively prevent harm from arising

It is a decade since the FCA last published a review of insurers’ claims-handling practices. While we welcome the FCA’s current in-depth focus on claims-handling, issues in the sector have built up over recent years which should have been addressed more proactively by the regulator. As well as taking robust enforcement action, the regulator should therefore improve its approach to the supervision of firms’ claims-handling practices. This would enable issues to be identified and addressed more proactively, ultimately preventing harm for consumers in the claims process. This should include a review of the research and evidence it is producing and requesting from insurers to help better assess whether firms are meeting the FCA’s requirements, and its strategy for monitoring this insight and engaging firms.

Footnotes

[1] See, for example, Which?’s three-part investigation into buildings insurance claims: Which? (2023) Home insurance customers short-changed by meagre payouts  ↑

[2] Especially Part 2 of the Consumer Rights Act (requiring contract terms to be fair) and section 49 (implying contractual duties that services must be carried out with reasonable care and skill)  ↑

[3]  Under the Consumer Insurance (Disclosure and Representations) Act 2015  ↑

[4] FCA (July 2022) FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty, and FCA (Feb 2023) Dear CEO letter: Implementing the Consumer Duty in the General Insurance and Pure Protection sectors  ↑

[5] Comments by Dan Hurl, Head of Insurance, FCA: “For the most part, I believe that the Consumer Duty will not be as significant a change for the insurance market compared to other areas of financial services." See FCA (2022) Transcript: Consumer Duty Webinar – Insurance  ↑ 

[6] The full list of problems can be found in the annex of this report  ↑

[7]  ABI (Jan 2024) Motor Insurance Premiums Continue to Rise as Insurers Battle Costs and (Feb 2024) The Cost of Home Insurance Rises as Insurers Support Customers and Battle Cost Pressures  ↑ 

[8] Which? analysis of FOS complaints data from 2019-2023. See FOS (2024) Annual complaints data  ↑

[9] FCA (July 2022) FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty, and FCA (Feb 2023) Dear CEO letter: Implementing the Consumer Duty in the General Insurance and Pure Protection sectors  ↑

[10] Comments by Dan Hurl, Head of Insurance, FCA: “For the most part, I believe that the Consumer Duty will not be as significant a change for the insurance market compared to other areas of financial services." See FCA (2022) Transcript: Consumer Duty Webinar – Insurance  ↑

[11] See FCA (Feb 2023) Implementing the Consumer Duty in the General Insurance and Pure Protection Sectors, and (Sept 2022) Our expectations on cost of living and insurance  ↑

[12] Health conditions included: Alzheimer’s Arthritis, Hearing impairment, Autism, Multiple Sclerosis, Cancer, Osteoporosis, Cerebral Palsy, Parkinson’s disease, Cystic fibrosis, Mental health illness, Dementia and Visual impairment  ↑

[13] Respondents with dyslexia or rating their numeracy skills, knowledge of financial services or ability to use the internet as poor or had no education or school qualification were categorised as having a lower capability. The FCA’s definition of vulnerability is clear that low knowledge of financial matters or low financial capability, and low capability in other relevant areas such as literacy or digital skills, are all key drivers of an increased risk of vulnerability. See FCA (Feb 2021) FG21/1 Guidance for firms on the fair treatment of vulnerable customers  ↑

[14] Siegel, D., 2012. The Developing Mind. 2nd ed. New York City: Guildford Press, p.284  ↑