Insurers criticised for delaying claims pay-outs as complaints soar

Latest quarterly data from the Ombudsman shows complaints about car, motorcycle and buildings insurance have reached the highest levels in five years.

The Financial Ombudsman Service received 3,869 complaints about car and motorcycle insurance between April and June 2023, a 53% increase on the same period last year. There were also 1,776 complaints about building insurers, an 8% increase on last year. 

A rise in insurers delaying paying out on claims and slow repairs caused by the lack of contractor availability and materials are blamed for the increase in complaints. The Ombudsman has also been upholding more of the complaints that it sees.

Abby Thomas, Chief Executive and Chief Ombudsman at the Financial Ombudsman Service, said:

‘Where these complaints are driven by insurers delaying paying out on claims that’s unacceptable. We expect insurers – as well as other businesses – to treat their customers fairly and in a timely manner.’

As complaints about insurers reach a record high, current accounts remain as the most complained about financial product, with 7,224 complaints. This is followed by 4,189 complaints about credit card providers. Both have also seen year-on-year increases.

Poor deal for motorists

Research from Which? has found that motorists are getting a poor deal overall. Rocio Concha, Which? Director of Policy and Advocacy, said:

‘Buying car insurance is a legal requirement for motorists, yet Which? Research has found that customers are not only having to chase their provider over claims, but more than three quarters of car insurance customers reported they were not given an explanation by their insurer for rejected, partially accepted or disputed claims.’

The consumer group is calling on the regulator to be tough on insurers that are falling below the required standards.

New rules from the financial regulator – known as the Consumer Duty – require all financial services providers to deliver better results for their customers. These rules should make it easier for you to hold companies to account for poor practice.

Car finance complaints more than double

Car finance (or hire purchase) complaints to the Ombudsman more than doubled in this latest quarterly data compared to last year. It was the fourth most complained about financial product with 3,678 complaints compared to 1751 the same time last year – though fewer complaints were upheld by the ombudsman than last year.

Car finance giants are currently facing a legal challenge of over £1bn for ripping off consumers. Around a million UK consumers could have unwittingly overpaid for car finance over a six year period. 

Three collective action lawsuits were filed at the specialist competition court last month accusing the three largest car financing companies, Lloyds Banking Group, MotoNovo and Santander, of acting to inflate interest rates.

Doug Taylor, an experienced consumer advocate who filed the claims, said:

‘We believe that Black Horse Ltd (Lloyds Banking Group), MotoNovo and Santander took advantage of their customers. Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers.’

‘I am standing up for people across the UK who have been affected by the actions of these companies, seeking justice and compensation for the financial losses they have suffered.’

The mis-selling of car finance is a key theme in the types of complaints seen by the Ombudsman.

Taking complaints to the Ombudsman

If you don’t feel you’ve been treated fairly by a financial firm, you can escalate your complaint to the Financial Ombudsman Service. This service is free to use and independent of the businesses you might be complaining about. It will investigate complaints where you haven’t managed to resolve them with the business first.