Coronavirus (COVID-19)—FCA introduce temporary measures for insurance customers

Coronavirus (COVID-19)—FCA introduce temporary measures for insurance customers

The Financial Conduct Authority (FCA) has confirmed a number of temporary measures to help customers who hold insurance and premium finance products who may be in financial difficulty due to coronavirus (COVID-19). The measures follow a short consultation and come into force on 18 May 2020. It will be reviewed in the next three months and revised if appropriate.

Actions that firms can take, include:

• reassessing the risk profile of customers. This may have changed due to coronavirusand there may be scope reduce premiums

• considering other products to better meet the customer’s needs and revise the cover accordingly

• waiving cancellation and other fees associated with adjusting policies

These actions could result in a reduction in the monthly premiums or a partial refund of annual premium. If amendments do not help alleviate the temporary payment difficulties, then the FCA expects firms to grant customers a payment deferral unless it is obviously not in the customer’s interests to do so.

The payment deferral should be granted for a period of between one–three months, though firms can go beyond three months should they wish to do so, and it is in the customer’s interests. Customers should be able to request a payment deferral at any point during the period up to 18 August 2020 while the window for requesting a payment deferral is open.

If payment deferral is not considered appropriate, firms should promptly offer other ways to provide temporary relief to the customer. These include, but are not limited to:

• accepting reduced repayments, or rescheduling the term

• waiving missed or late payment fees

• permitting a customer to amend their repayment date without any cost

The FCA expects firms to consider reviewing interest rates associated with instalments to determine whether they are consistent with the obligation to treat customers fairly in the light of the exceptional circumstances arising out of coronavirus.

Sources:

FCA confirms measures to help insurance customers who may be suffering financial difficulties as a result of coronavirus

Feedback statement FS20/5

Coronavirus and customers in temporary financial difficulty: guidance for insurance and premium finance firms

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