The Financial Conduct Authority (FCA) came under criticism during the first public evidence session of the House of Lords Financial Services Regulation Committee's inquiry into the consumer insurance market on Wednesday, June 10, 2026, with witnesses questioning whether enforcement action has kept pace with evidence of poor claims outcomes in parts of the home insurance sector.
The committee, chaired by Baroness Noakes DBE, is examining the regulation of the home and travel insurance market, including claims handling, enforcement and consumer redress. Giving evidence were Matt Scott, co-founder and chief product officer at Insurance Datalab, and Matthew Brewis, KPMG partner and former FCA insurance director. Scott told peers the market covered by the inquiry generates more than £8bn in annual premiums.
Scott said enforcement, rather than regulation, was the main issue.
"I think the enforcement's the problem," he said. "I think the regulations are looking at the right things."
Drawing on analysis conducted by Insurance Datalab, Scott said claims acceptance rates in buildings insurance have fallen by nine percentage points since Consumer Duty came into force in 2023. Combined buildings and contents policies are down six percentage points over the same period, while contents insurance acceptance rates have increased by 11 percentage points and travel insurance has seen more modest improvements.
The data presented to the committee showed significant variation between providers. Buildings insurance claims acceptance rates range from 45% to 85%, according to Insurance Datalab's analysis. Contents insurance ranges from 60% to 90%, while combined home policies and travel insurance both range from 55% to 100%. Scott said the equivalent figure in motor insurance is around 99%.
He also referred to the FCA's July 2025 review of outsourced claims handling, which identified concerns around claims outcomes.
"I don't think any policies have been withdrawn that I've heard of, for example, for not delivering value when those fair value assessments came in," Scott said. "When you're seeing those low acceptance rates, you could maybe question that."
Brewis said the regulator had undertaken further supervisory work following its review of outsourced claims handling but argued that the Consumer Duty framework itself was sufficient.
Scott cited FCA findings showing that 32% of storm damage claims resulted in a settlement, while 46% were declined and 19% were abandoned before reaching an outcome.
He said the figures highlighted shortcomings in consumer understanding and argued that many declined claims arise because customers do not fully understand the cover they have purchased.
He cited the example of a homeowner who discovered during a claim that a £500 excess applied to each affected room. With four rooms damaged, the customer faced a total excess of £2,000 and decided not to proceed with the claim.
Brewis said customer understanding was one of the main issues identified during the FCA's review of the home insurance market.
Both witnesses also highlighted the role of price comparison websites, arguing that consumers are often encouraged to focus on price without access to comparable information about claims performance. Scott said claims and complaints data exists across the FCA, the Financial Ombudsman Service and insurer disclosures but is not presented in a consistent format.
Scott said Consumer Duty's fair value assessment requirements have increased compliance costs and operational complexity for brokers. He said some firms had reduced insurer panels and that, in some cases, the compliance burden had contributed to smaller brokers selling their businesses.
"The regulation doesn't actually bring in any money," Scott said. "It can help because if you're delivering a better service to your customer over the long run, it kind of will improve your business, but it doesn't bring it in through the door straight away."
Brewis said the principles-based approach underpinning Consumer Duty remained preferable to a more prescriptive regime but acknowledged that firms would benefit from greater clarity around regulatory expectations.
Referring to outsourced claims handling, he said: "You can outsource the work, you can't outsource responsibility." He added that insurers need better management information to monitor the performance of third-party claims handlers.
Both witnesses indicated that further FCA action is likely. Brewis said the regulator's previous reviews had established clear expectations for firms and suggested further consequences could follow where those expectations were not met.
Scott said he would be "very surprised" if enforcement action against poor-performing firms did not materialise.
