10:31 am, September 19, 2025
More than a quarter-of-a-million motorists are set to pocket £200m in compensation, after the Financial Conduct Authority (FCA) found some insurers had ‘short-changed’ customers on stolen or written-off vehicle claims.
The regulator says that a whopping 270,000 claimants are entitled to redress, with £129m already being paid out to nearly 150,000 customers, relating to the historic claims.
The FCA carried out detailed work with insurers, following an initial review last year, which found that in some cases, automatic deductions to payouts were made for assumed pre-existing damage.
The investigation found that this put careful drivers, who had looked after their vehicles, at a distinct disadvantage, making it harder for them to buy like-for-like replacements.
As a result of the findings, insurers have now overhauled their claims processes in line with the regulator’s Consumer Duty.
Sarah Pritchard, deputy chief executive of the FCA, said: ‘We will 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.’
Anyone who is dissatisfied with how a claim is handled, should speak to their insurer first and then contact the Financial Ombudsman Service (FOS) if they are not satisfied with the response, the FCA said.
It added that customers do not need to use a claims management company (CMC) to complain or make a claim.
The changes made to claims practices follow action from the FCA on vehicle valuations.
In December 2022, the FCA warned insurers not to undervalue cars and other insured items when settling insurance claims and set out its expectations for firms when handling claims.
In March 2024, the regulator published a multi-firm review which identified shortcomings in insurers’ valuation of vehicles. It engaged directly with firms with issues and committed to investigating further.
In June 2023, the FCA published a voluntary requirement in relation to vehicle valuations on the Financial Services Register. This required Direct Line Group to review five years of claims outcomes and pay redress where appropriate. The requirement has since been removed.
In August 2025, Admiral announced it had set aside £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 requires firms to act to deliver good outcomes for consumers, and that they are supported while using a financial product, including when they make claims.
