The Financial Conduct Authority (FCA) has released extra guidance on how insurance providers should deal with clients who hold insurance and premium finance products that find themselves in financial hardship because of the coronavirus pandemic.
This follows temporary measures that were put in place in May 2020 that are supposed to end after 31 October 2020.
The regulator said firms should provide tailored support to customers who have already had a payment deferral, as well as those who are now facing financial difficulty due to the situation changes linked to covid-19.
Measures for insurance arrangements include:
- 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; and,
- Providing help to avoid the need to cancel necessary cover.
Lending a hand
For clients who hold premium finance arrangements, help may come in a range of ways, such as:
- Allowing the customer to make no or reduced payments for a specified period;
- Suspending, reducing, waiving or cancelling any further interest or charges; and,
- Allowing the customer a reasonable time and opportunity to repay the debt, including by deferment of payment of arrears.
But there are differences in the newly introduced guidance, as the FCA does not expect insurance providers to “proactively contact” all consumers who miss a payment, but they should consider whether it is appropriate to get in touch with customers to offer support if they do.
The watchdog added: “Firms should make the different options available to consumers clear in their communications, including on their websites and apps, and encourage them to make contact if they are experiencing financial difficulties.”
The FCA has opened the guidance for comment until 5pm on 20 October 2020.
