By Alex Hickey,Robert Dalling,Vicky Shaw PA Personal Finance Correspondent

Copyright dailypost

Around 270,000 motorists are set to receive £200 million in compensation. This comes after the Financial Conduct Authority (FCA) discovered that some insurers had underpaid customers on claims for stolen or written-off vehicles.

To date, nearly 150,000 customers have received £129 million relating to these historic claims, according to the regulator.

The FCA conducted thorough work with insurers following an initial review last year. The review found that in some instances, automatic deductions were made from payouts for assumed pre-existing damage.

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This practice particularly 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, reports Wales Online.

Sarah Pritchard, deputy chief executive of the FCA, stated: “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.”

Customers due compensation will be contacted by their insurer.

For those who are unhappy with how a claim is processed, they should initially contact their insurer and then reach out to the Financial Ombudsman Service (FOS) if they remain unsatisfied with the response, according to the FCA.

The authority also emphasised that customers do not need to employ a claims management company (CMC) to lodge a complaint or make a claim.

These alterations to claims practices come in the wake of the FCA’s action on vehicle valuations.

In December 2022, the FCA cautioned 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 which highlighted deficiencies in insurers’ valuation of vehicles, leading to direct engagement with firms exhibiting issues and a commitment to further investigation.

In June 2023, the FCA listed a voluntary requirement concerning vehicle valuations on the Financial Services Register, necessitating Direct Line Group to review five years of claims outcomes and provide redress where necessary. This requirement has since been rescinded.

In August 2025, Admiral revealed 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 way that delivers positive results for consumers, ensuring they receive support while using a financial product, including during the claims process.

A representative for the Association of British Insurers (ABI) stated: “Insurers work hard to deliver the best possible service for their customers.

“There has been a lot of volatility in the second-hand car market in recent years which created challenges for insurers when trying to set valuations.

“Our members have made changes to their settlement approach and taken the necessary steps to support customers.”

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