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.
Keywords: Europe, UK, Insurance, COVID-19, Payment Deferrals, FCA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.