Insurers causing ‘distress and inconvenience’ in nearly two-thirds of complaints upheld by Ombudsman, says Which?
The consumer champion analysed more than 8,500 final complaint decisions by the Financial Ombudsman Service (FOS) which were upheld in the customer’s favour over the last five years. It found distress and inconvenience were recorded in nearly two-thirds (64%) of all complaints upheld by the service in 2023. This is a jump from over half (53%) of complaints recorded as causing distress and inconvenience in 2019.
Which? identified four insurers - Advantage Insurance Company, British Gas Insurance, British Gas Services and Hastings Insurance Services - that were each found to have caused distress or inconvenience to consumers in at least 70 per cent of upheld complaints.
Each received more than 100 complaints in the last five years, most of which were in the motor or home emergency insurance sector. Hastings Insurance had the highest rates – four in five (82%) customers who had their complaint upheld were awarded redress for distress and inconvenience caused. For British Gas Services, 77 per cent of upheld cases caused distress or inconvenience. For British Gas Insurance, the figure was 74 per cent and for Advantage Insurance, which is part of the Hastings Group, it was 72 per cent.
A spokesperson for Advantage Insurance and Hastings Insurance said they take complaint handling very seriously and understand “our experience is in line with that of other industry participants”. British Gas Insurance and British Gas Services did not respond to requests for comment at the time of publication. Over the last three years, the number of complaints being received by the FOS has increased. Of the 4,087 complaints received by the FOS in 2023, over half (51%) were upheld by the Ombudsman in the customer’s favour. That is an increase from 41 per cent in 2022 and 40 per cent in 2019.
For travel insurance, the research also found that customers who had a complaint upheld relating to medical issues had also suffered additional distress and inconvenience in nearly two-thirds (64%) of cases, and avoidable delays in nearly a third (31%). Thirty two per cent is the industry average across all products. These figures are particularly concerning as these consumers are a group already likely to have suffered physical or emotional harm, and who may have characteristics of vulnerability, who are being further impacted by their insurer.
Firms have been subject to longstanding industry requirements to ensure they take particular care to ensure they act to deliver good outcomes for customers with characteristics of vulnerability. Insurers’ actions leading to an unnecessary and avoidable delay in resolving a claim were also an issue, according to the analysis. Since 2019, home emergency insurance saw above average levels of delay (38%) and avoidable distress and inconvenience caused to consumers in almost three-quarters of complaints (73%). This is particularly concerning given the reasons customers would have to make claims of this nature and risks leaving people without access to hot water or heating. The highest number of upheld complaints were about buildings insurance products. Insured customers experienced unfair delays in nearly half (46%) of upheld complaints - more often than any other type of product.
The true number of customers feeling inconvenienced or distressed or experiencing unfair delays in resolving a claim when making a claim to their insurer is likely to be higher as not all consumers know that the FOS is available to them or will feel able to make a formal complaint. Which? is calling for the Financial Conduct Authority (FCA) to take tough action against insurance firms that are persistently failing to meet its requirements to avoid causing foreseeable harm and to handle claims fairly and in a timely manner.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research of consumers’ complaints to the Financial Ombudsman Service shows that in many cases insurance providers have caused additional distress and inconvenience to consumers - further prolonging the often already stressful ordeal.
“The FCA’s expectations and regulation are clear, yet it would appear some insurers continue to fall short of the standards expected. The regulator must get tough with poorly behaving companies and take action where necessary.”
-ENDS-
Notes to Editors
The Financial Ombudsman Service acts as a dispute resolution service between the customer and firm when a company does not resolve the complaint to the customer’s satisfaction and its decisions are binding, if the customer accepts the FOS decision.
The full report will be available to read on the Which? website here from 00.01 Thursday 30 May
Methodology
Which? collected the contents of just over 322,000 decisions published by the Financial Ombudsman Service on their online database. Decisions not related to motor, home, travel or pet insurance; regarding businesses with fewer than 30 published decisions; dated before 2019 and after 2023 were filtered out. This filtering process left 20,749 decisions relating to motor, home, travel and pet insurance - of which 8,547 were upheld by the FOS in the customer’s favour.
Which? researchers used artificial intelligence to understand the reasons given by the Ombudsman for upholding each complaint. Two key factors - distress and inconvenience and unfair delays - were picked. Distress and inconvenience captures cases where the insurer’s behaviour has resulted in a negative emotional or practical impact on a consumer, for example if they have had to repeatedly contact their insurer to resolve an issue, or have been left without a vehicle or hot water for a period of time while a claim was resolved. Unfair delay captures cases where an insurer’s actions have led to an unnecessary and avoidable delay in resolving a claim.
Right of replies
A spokesperson for Advantage Insurance said:
“We take complaint handling very seriously. We see a relatively small volume of these referred to the FOS, and of these, under half are upheld in the customers’ favour, in line with or slightly better than that of most other industry players.
“The nature of these complaints, along with the length of time they have to be reviewed, means that the FOS will often look to compensate for distress and inconvenience and although this is harder to benchmark, we understand our experience is in line with that of other industry participants.”
A spokesperson for Hastings Insurance said:
“We take complaint handling very seriously. We see a relatively small volume of these referred to the FOS, and of these, around one third are upheld in the customers’ favour (two thirds in our favour) – in line with or slightly better than that of most other industry players.
“The nature of these complaints, along with the length of time they have to be reviewed, means that the FOS will often look to compensate for distress and inconvenience and although this is harder to benchmark, we understand our experience is in line with that of other industry participants.”
British Gas Insurance and British Gas Services did not respond to requests for comment in time.
About Which?
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful. The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk.