October 16, 2020 3:23:08 PM
Proposals to support insurance customers who are in financial difficulty after October due to coronavirus have been outlined by the City regulator.
The Financial Conduct Authority (FCA) said its new draft guidance aims to prompt firms to help customers, where possible, to reduce the impact of financial distress and ensure they continue to have insurance that meets their needs.
Some customers may need temporary support while others may need help longer-term, the FCA said.
It is asking for feedback to be submitted by 5pm on Tuesday October 20 on what arrangements should be in place after October 31.
Temporary measures to help customers have been in place since May.
The new proposals will mean consumers who have already had a payment deferral as well as those newly in financial difficulty will still receive support tailored to their needs.
This would include reassessing the risk profile of the customer to see whether they could be offered lower monthly payments, considering whether other products may suit them better, and help to avoid cancelling cover which the customer needs.
Some customers could be allowed more time to repay debts and some charges could be reduced or waived.
The FCA said the new guidance differs from measures previously put in place.
For example, firms will not be expected to proactively contact all consumers who miss payments. They should still consider whether it may be appropriate to contact them to offer support and consider customers’ vulnerabilities.
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 said.
Gareth Shaw, head of money at Which?, said: “While the FCA is rightly proposing guidance for firms to continue supporting customers struggling as a result of coronavirus, it’s very concerning that the regulator is no longer requiring insurers to proactively contact those who miss a payment.
“Customers missing payments are likely to be vulnerable, and firms should be doing everything they can to engage with and support those who need it most.”
He said many people could be facing “a perfect storm of financial pressures in the coming months”, adding: “The regulator must reconsider its position on winding down vital protections like payment deferrals and the damaging long-term impact that these extenuating circumstances will have on a consumer’s credit file.”