FCA Proposes More Measures to Help Insurance Customers Amid Crisis
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020. The proposed guidance sets out how firms should provide tailored support to consumers who have already had a payment deferral and those newly in financial difficulty due to the changed circumstances related to COVID-19 outbreak. This guidance follows the temporary measures that have been in place since May this year. Comments could be provided until October 20, 2020 and, if confirmed, this additional guidance will come into force by November 01, 2020.
The aim of the guidance is to prompt firms to help qualifying customers, where possible, to reduce the impact of financial distress and ensure that customers continue to have insurance that meets their demands and needs. For insurance arrangements, this includes measures such as:
- Re-assessing the risk profile of the consumer to see whether they could be offered lower monthly payments
- Considering whether other products can be offered which better meet the consumer’s needs
- Providing help to avoid the need to cancel necessary cover
Where customers hold premium finance credit regulated agreements, help could include:
- Allowing the customer to make no or reduced payments for a specified period
- Suspending, reducing, waiving or cancelling any further interest or charges
- Allowing the customer a reasonable time and opportunity to repay the debt, including by deferment of payment of arrears
The measures in this guidance differ from the measures in the earlier guidance. In this guidance, firms are not expected to proactively contact all consumers who miss payments. However, they should still consider whether it is appropriate to contact a customer to offer support if they have missed a payment. These measures follow the guidance published in August 2020, under which the expectation to grant payment deferrals expires on October 31. This 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 instalments, premium finance brokers that carry on regulated activities relating to credit granted for the purposes of financing insurance premiums in instalments, debt collectors, and other firms that may be involved in insurance arrangements and/or the provision of premium finance.
Related Guidance
Keywords: Europe, UK, Insurance, COVID-19, Payment Deferrals, FCA
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Related Articles
EC Regulation Sets Out Standards for Reporting and Disclosure of MREL
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
EBA Report Notes Loan Origination Should Remain in Supervisory Focus
EBA published a report that examines the convergence of prudential supervisory practices in 2020 and offers conclusions of the EBA college monitoring activity.
APRA Decides to Standardize Submission Date for Quarterly Reporting
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
ECB Working Group Publishes Recommendations on EURIBOR Fallbacks
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank Publishes Supporting Documentation for Reporting by Banks
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA Publishes Phase 1 of Reporting Framework 3.1
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
IOSCO Sees Support for Mandatory Sustainability Reporting
The Sustainable Finance Taskforce of IOSCO held two roundtables, with global stakeholders, on the IOSCO priorities to enhance the reliability, comparability, and consistency of sustainability-related disclosures and to collect views on the practical implementation of a global system architecture for these disclosures.
APRA to Finalize Capital Adequacy Standard Revisions by January 2022
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA Issues Guidelines on Outsourcing to Cloud Service Providers
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA Publishes Data on Deposit Guarantee Schemes
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.
