A total of 270,000 motorists are set to pocket a share of £200 million in compensation, averaging at £740 each, after the Financial Conduct Authority (FCA) discovered some insurers had short-changed customers on claims for stolen or written-off vehicles. To date, nearly 150,000 customers have received £129 million relating to historic claims, according to the regulator.
The FCA has been working closely with insurers following an initial review last year, which revealed that in some instances, automatic deductions were made from payouts for assumed pre-existing damage. This practice unfairly disadvantaged careful drivers who had maintained their vehicles well, making it difficult for them to purchase like-for-like replacements. Insurers have since revamped their claims processes in accordance with the regulator’s Consumer Duty.
Sarah Pritchard, deputy chief executive of the FCA, said: “We’ll step in when consumers aren’t getting fair value – and we are pleased to see that the practices which led to some unfair payouts have already changed. This means thousands of motorists are getting back what their car was really worth, in cases where cars have been stolen or written off. If you’re owed compensation, your insurer will contact you, or will have already done so – there’s nothing you need to do.”
How claims will be paid
Customers due for compensation will be contacted directly by their insurance provider, the Financial Conduct Authority (FCA) has stated. If any policyholder is unhappy with how a claim is being handled, they should first address their concerns with their insurer and then, if unsatisfied with the response, reach out to the Financial Ombudsman Service (FOS).
The FCA further clarified that there is no need for customers to employ a claims management company (CMC) to lodge a complaint or make a claim. These directives follow the FCA’s recent actions on vehicle valuations.
In December 2022, the FCA issued a warning to insurers against undervaluing cars and other insured items when settling insurance claims, outlining its expectations for firms during the claims process. By March 2024, the regulator had published a multi-firm review, highlighting deficiencies in insurers’ vehicle valuation practices.
The FCA engaged directly with firms exhibiting issues and pledged to conduct further investigations.
In June 2023, the FCA listed a voluntary requirement concerning vehicle valuations on the Financial Services Register. This required Direct Line Group to review five years of claims outcomes and provide appropriate redress where necessary.
This requirement has since been lifted. In August 2025, Admiral announced it had earmarked £50 million to compensate customers who were not given a fair settlement when claiming for stolen or written-off cars.
The FCA’s Consumer Duty mandates firms to act in a manner that ensures good outcomes for consumers, providing support throughout the use of a financial product, including during the claims process.