The Financial Ombudsman Service (FOS) has already begun seeing cases brought to it which encompass elements of the Consumer Duty regulations introduced in July.
And it expects to see more complaints regarding insurance than previously anticipated, with premium reductions and their effect on cover a key element of this.
The regulator revealed these issues as part of its plans and budget consultation paper published today.
Regarding the Financial Conduct Authority’s (FCA) Consumer Duty regime, the FOS said it expected a reduction in work eventually but there were cases coming in.
“The FCA Consumer Duty intends to drive up standards for businesses, which we believe, over time, might reduce the number of complaints reaching us,” it said.
“Nevertheless, we recognise that some industry stakeholders have expressed concerns that complaints may rise in the short term while firms adjust.
“We have started to receive complaints where the duty may be relevant. We will continue to engage with firms and the FCA on how the Consumer Duty impacts our complaint volumes and approach to complaints.”
Insurance cases rising
Latest figures from the FOS suggested the insurance sector is one of its fastest growing workloads
In 2022/23 it received 39,730 cases covering insurance and for 2023/24 it now expects 43,200 – an increase of 3,470 or 9%.
For 2024/25 it projects insurance complaints to reach 44,300 – up 2.5%
The FOS pinpointed four key reasons for this growth, noting that potential complaints relating to consumers reducing the cost of their insurance premiums to help with overall costs, perhaps without realising the impact this may have on the type or level of cover provided, could be an issue.
Complaints about travel insurance will also likely remain high into 2024/25 given the impact of flight cancellations in 2023/24, and grievances about motor insurance are expected to remain high due to the increased costs and supply challenges around parts and labour
However, complaints about claim delays should reduce following the FOS’s work to share its approach on these cases.
Overall, the FOS is now expecting to receive around 179,000 cases in the 2023/24 financial year, up 8.3% from 165,149 in 2022/23, but it is only projecting a slight increase of 1% to 181,300 for next year.