This review aligns with the FCA’s intensified scrutiny of the motor finance market. Credit: T. Schneider/Shutterstock.

The UK’s Financial Conduct Authority (FCA) has revealed that some insurance companies may not be offering fair valuations for customers’ written-off or stolen vehicles.  

In a review, the regulator said it has uncovered evidence indicating that certain firms are potentially undervaluing vehicles when settling claims.  

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This practice persists despite previous warnings from the regulator that insurers must provide accurate valuations.  

The FCA has found that some companies only revise their offers upon customer complaints, raising concerns about systemic undervaluation. 

In response to these findings, the FCA is actively engaging with the implicated firms to ensure that they implement necessary improvements.  

The FCA said that these actions are in line with its focus on consumer protection, particularly following the introduction of the Consumer Duty in July 2023, which mandates financial firms to act in the best interest of their customers. 

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FCA executive director of consumers and competition Sheldon Mills said: “Having your vehicle written off or stolen can be intensely stressful and we expect firms to offer the right support to help their customers. 

“We expect all motor insurers to take note of our findings and we are engaging directly with those that have issues that need to be addressed.” 

This review comes amid the intensified scrutiny of the motor finance market by the regulator.

Earlier this month,  the FCA chief Nikhil Rathi emphasised the importance of addressing motor finance industry-related issues promptly and fairly.  

In January 2024, the FCA launched an investigation into the previous motor finance commission agreements.  

The focus of the review is whether, between 2007 and 2021, open commission structures resulted in overcharging consumers for auto loans.