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
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