Has Consumer Duty Really Improved Consumer Outcomes?

Consumer Duty was introduced by the Financial Conduct Authority (FCA), it was hailed as a transformative step towards ensuring fair treatment and better outcomes for consumers in the financial services sector. Designed to hold firms accountable for delivering good customer experiences, the initiative aimed to address long-standing issues in product offerings, claims handling, and service transparency.

However, nearly two years since its implementation, there is growing concern that Consumer Duty has not only failed to achieve its intended goals but has, in some cases, enabled insurers to double down on unfair practices. From opaque policy terms to systemic delays in claims processing, many consumers continue to face significant challenges when dealing with insurance providers. The question remains: is the regulatory framework being effectively enforced, or has Consumer Duty become little more than a badge for insurers to hide behind?

This article explores the reality of Consumer Duty in practice, highlighting how misleading policy structures, unfair claims handling, and insurer-driven obstacles continue to undermine consumer rights.

Quote of the day

“Too many people are having their claims rejected and enduring appalling treatment at the hands of insurance companies.” – Which? Director of Policy and Advocacy

What Is Consumer Duty?

Consumer Duty is a set of rules introduced by the Financial Conduct Authority (FCA) in the UK to enhance consumer protection within financial services. It includes a new Consumer Principle (Principle 12), setting high-level expectations for conduct and associated outcomes.

Implemented on 31st July 2023, Consumer Duty aimed to close gaps in fairness, particularly in product offerings and claims processes. However, nearly two years later, has it truly delivered on its promises?

While insurance companies and loss adjusters have made efforts to comply with these regulations, consumer outcomes have not significantly improved. In many cases, they have worsened. This raises critical concerns:

  • Has Consumer Duty inadvertently allowed insurers to continue unfair practices under a regulatory badge?
  • Is enforcement of these standards lacking?
  • Why do insurers push cases to the Financial Ombudsman Service (FOS) instead of delivering fair resolutions from the outset?

Are Insurance Policy Tiers a Red Flag?

When renewing or selecting a new policy, consumers are often presented with Platinum, Gold, Silver, or Bronze options. While intended to simplify choices, these tiers can be misleading.
I recently renewed my home insurance policy and opted for a Platinum plan—not because “more expensive is better” but because I understood the importance of settlement clauses, matching items cover, and accidental damage protection. However, most consumers lack this expertise.
According to Which? Director of Advocacy and Policy, Rocio Concha Galguera:
“Faced with the choice of gold, silver and bronze, we tend to take certain mental shortcuts. Gold is probably too expensive and too comprehensive, while bronze seems inadequate. That leaves silver—but this decision can have serious repercussions when making a claim.”
This highlights a major issue: do consumers truly understand their policy coverage? Or are insurers deliberately crafting policies that fail to meet expectations?

Common Insurance Exclusions That Catch Consumers Off Guard

Research conducted by Which? found that many consumers hold unrealistic expectations about what their insurance covers:

  • 45% of contents insurance policyholders assumed they would be covered for theft if away travelling for three months. In reality, most policies become invalid if a property is unoccupied for more than 30-60 days.
  • 39% believed storm damage to a fence was covered—when it is typically excluded.
  • 34% assumed wet rot in floorboards would be covered—again, a common exclusion.

Even more concerning are the hidden complexities in settlement clauses. Some insurers:

  • Refuse to use a consumer’s preferred repair supplier, forcing them into subpar service.
  • Enforce “settlement by an estimated cost” clauses, which allow them to pay what they deem reasonable—often failing to cover actual damages.
  • Set arbitrary “limits of liability” on repairs, leaving consumers unable to restore their homes properly.

The Property Claim Assist View

With 2025 financial results approaching, some insurers are already reporting significant profit increases. While the home insurance market is complex, some insurers are suffering losses due to poor claims handling, not pricing structures.

By:

  • Forcing their own repair suppliers (who often deliver substandard service),
  • Delaying claims unnecessarily, leading to higher accommodation and consequential loss costs, and
  • Pushing customers into prolonged disputes,

these insurers are ultimately harming both their customers and their own bottom lines.

Our Call to Action: Stop the Insurance Rip-Off

We support Which?’s call for FCA action. This issue cannot be left in the hands of insurers who prioritise profits over fair treatment.

  • Consumers should not be blamed for misunderstanding complex policy terms.
  • The onus of responsibility must shift to insurers to ensure transparency and fairness.
  • Certain insurance products and services should come with a warning due to their potential for consumer harm.

At Property Claim Assist, we champion consumer rights. We provide advocacy, introduce trusted repair partners, and guide you through the complexities of insurance claims to ensure you receive the best possible outcome.

If you’re struggling with an insurance claim, contact us today. We’re on your side.

Written by

Tom Butcher, Director of Property Claim Assist

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