The Financial Conduct Authority (FCA) has introduced a series of temporary measures to help customers holding insurance and premium finance products who are in financial difficulty due to COVID-19.
The measures will come into force on 18 May 2020 and will be reviewed in the next three months and revised if appropriate.
The FCA’s measures require firms to consider reassessing the risk profile of customers, considering whether there are other products which might better meet the customer’s needs, waiving cancellation and other fees associated with adjusting customers’ policies.
Where amendments to the insurance cover do not help alleviate payment difficulties, the FCA expects firms to grant customers a payment deferral unless it is obviously not in the customer’s best interests to do so.
The payment deferral should be granted for a period of between one and three months, but can be granted for a longer period if firms wish to do so.
Customers should be able to request a payment deferral at any point during the period up to 18 August 2020.
Where a deferral is not appropriate, firms should consider actions such as accepting reduced payments or rescheduling the term, waiving missed or late payment fees, and permitting the customer to amend their repayment date without added cost.
The FCA also expects firms to consider reviewing interest rates associated with instalments, to determine whether they are consistent with the obligation to treat customers fairly in light of the current circumstances.
The FCA has also advised that firms make the available solutions clear in their communications to customers.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus.
“The majority of respondents expressed support for the proposals we published at the start of May.
“Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals.
“The measures confirmed today will provide urgent support to those that need it.”