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
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