FCA announced proposals to extend a series of temporary measures for three months to help customers that hold insurance and premium finance products and that may be in temporary financial difficulties because of the COVID-19 crisis. The guideline is proposed to be extended until October 31, 2020, although certain parts of it will continue beyond that date. FCA is also proposing to more clearly set out its expectations on how firms should treat customers still in financial difficulty at the end of a payment deferral. The original measures came into force on May 18, 2020 and FCA committed to reviewing them after three months. FCA is seeking comments on its proposal by July 28. If confirmed, the updated guidance will come into force by August 18, 2020.
The proposed updated guidance sets out the expectations for firms when considering the fair treatment of existing customers in financial difficulty, due to circumstances arising from the pandemic. The proposed guidance specifies that firms should continue to consider what options they can offer customers. Where payment deferral is not in the best interest, the measures that could be taken may include premium reductions due to changes in risk profile, offering an alternative product that would better meet the customer needs, and waiving fees associated with altering cover. Where amendments to the insurance cover do not help alleviate the customer’s temporary payment difficulties, firms will be expected to grant a payment deferral of between one and three months, unless it is obviously not in the customer’s interest to do so. It is important that customers do not leave themselves uninsured and that their insurance cover meets their demands and needs. Those struggling to afford their insurance or premium finance payments because of the impact of the pandemic should contact their insurer or insurance broker to discuss their options.
The guidance applies to regulated firms operating in the insurance and premium finance markets. This includes insurers, insurance intermediaries (including appointed representatives), premium finance lenders that provide credit to fund the payment of insurance premiums in installments, premium finance brokers that carry on regulated activities relating to credit granted for the purposes of financing insurance premiums in installments, debt collectors, and other firms that may be involved in insurance arrangements and/or the provision of premium finance.
Keywords: Europe, UK, Insurance, Premium Finance Firms, COVID-19, Payment Deferrals, Guideline, FCA
Previous ArticleEC Proposes Amendments to Benchmarks Regulation
Next ArticleFED Updates FR Y-14Q Reporting Form and Instructions
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.