Failing Consumer Duty with renewal barriers

What happened?

TCC has identified a recurring trend across parts of the insurance sector where the ease of purchasing products or adding cover is not matched by the ease of cancelling, reducing or changing policies. Customers are often required to wait in lengthy phone or chat queues, complete additional forms, navigate multiple handovers, or face retention tactics before they can action a cancellation or opt out of automatic renewal.

The FCA’s Insurance Conduct of Business Sourcebook (ICOBS) makes clear that firms must offer cancellation methods that are at least as accessible as the methods used to purchase a policy and should not create unnecessary barriers for customers.

Why does it matter?

Difficult cancellation and renewal processes can lead to customer frustration, poor outcomes and reduced trust in insurers. Where firms promote digital convenience and online account functionality, customers are likely to expect they can manage, amend or cancel policies through the same channels.

The issue is also closely linked to Consumer Duty expectations, with firms required to demonstrate they are delivering fair treatment, removing avoidable friction and supporting customers throughout the product lifecycle, not just at the point of sale.

Who is affected?

Insurance firms offering automatic renewals, online account management, or policy administration services may be affected by FCA scrutiny in this area.

Customers may be particularly impacted where cancellation processes are significantly more difficult than purchasing processes, or where they have limited ability to access online services and rely on customer support channels.

Key risks

• Cancellation or renewal processes that are more difficult than the process used to purchase a policy.
• Long call waiting times or online chat queues for customers seeking to cancel.
• Excessive retention tactics, additional steps or unnecessary questioning before a cancellation can be completed.
• Poor customer outcomes and increased complaints.
• Failure to meet FCA expectations under ICOBS and Consumer Duty.
• Offering significantly reduced prices only when customers attempt to cancel or renew, raising concerns around fair customer treatment and pricing practices.

Actions to take

• Review cancellation, renewal and policy amendment journeys against FCA ICOBS requirements.
• Ensure cancellation channels are as accessible as purchasing channels.
• Assess whether automatic renewal opt-out processes are straightforward and customer-friendly.
• Review call handling times, staffing levels and customer support resources.
• Test customer journeys across digital and non-digital channels.
• Gather customer feedback on renewal and cancellation experiences and use findings to drive improvements.
• Review retention and pricing practices to ensure customers are receiving fair outcomes.

Wider implications

The FCA continues to focus on customer outcomes, transparency and fair treatment throughout the entire customer journey. Firms that make it easy to buy but difficult to leave may face growing scrutiny as regulators increasingly assess whether operational processes support good consumer outcomes in practice.

The issue also highlights the importance of aligning target operating models, digital services and customer support functions with regulatory expectations and customer needs.

Recommendations

TCC recommends that firms: