FCA updates guidance on COVID-19 measures

The FCA has proposed an extension until 31st October 2020 of the temporary measures it put in place to help customers who hold insurance and premium finance products and who may be suffering from COVID-related financial difficulties.

Firms should continue to consider what options they can offer customers, it said. "Where payment deferral is not in the best interest, the measures that could be taken may include premium reductions due to changes in risk profile or offering an alternative product which would better meet the customer’s needs, as well as waiving fees associated with altering cover," the watchdog stated.

"Where amendments to the insurance cover do not help alleviate the customer’s temporary payment difficulties, firms will be expected to grant a payment deferral of between 1 and 3 months, unless it is obviously not in the customer’s interest to do so."

Welcoming the proposals, Keith Richards, managing director of engagement for Chartered Insurance Institute, said: “With many people who have either seen drops in their income, or income stopping entirely, any action an insurer can take to reduce even a small part of a household’s financial strain, is one we should all champion.

“Without being prescriptive as to what actions firms have to take, but by giving them the flexibility to consider all options, the FCA has allowed insurers the opportunity to find solutions that work best for customers and themselves, rather than attempt a one size fits all policy.

“This versatility in the face of an unprecedented situation will mean firms can respond quickly to the needs of the individual and should be commended.”

The original measures came into force on 18th May and the FCA committed to reviewing them after 3 months.

The regulator is seeking comments from stakeholders by 17:00 on Tuesday 28th July.

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