The Financial Conduct Authority (FCA) has today proposed a range of additional measures that firms should implement to help insurance customers who may be facing financial difficulty due to the COVID-19 pandemic, after October 31, 2020. The guidance follows the temporary measures put in place by the FCA in May 2020 and sets out how firms should provide tailored support to both consumers who have already had a payment deferral and those who are now in financial difficulty due to changed circumstances.
With relation to insurance arrangements, these measures include:
- The reassessment of a consumer’s risk profile to examine whether they could be offered reduced monthly payments.
- The consideration of whether other products might better meet a consumer’s needs.
- The provision of help to prevent the cancellation of necessary cover.
Where customers hold premium finance credit regulated agreements, the help firms should be considering include: allowing the customer to make either no or reduced payments for a specific period, the suspension/waiving/reducing or cancelling of any further interest or charges, and giving all customers a reasonable time to repay any debt.
The measures differ from previous guidance in a range of ways including that firms are not expected to proactively contact all consumers who miss payments. However, the FCA noted, that firms should still consider whether this is appropriate as well as what steps they should take for vulnerable customers. Another key difference is that the specific expectations of forbearance measures in the premium finance sector are now limited to regulated credit agreements and will not apply to non-regulated instalment payment arrangements. Again, firms are not prevented from applying the measures previously established.
The FCA reiterated that firms should make all available options clear to their consumers in all their communications, and should encourage consumers to make contact if they are experiencing financial difficulties.
The guidance is open for comment until 5pm on Tuesday, October 20.