FCA proposes additional measures to help insurance customers in financial difficulty

YOUR COMPLIANCE MATTERS:         FCA proposes additional measures to help insurance customers in financial difficulty

Relevance:                 All firms.

Action required:       Ensure that you continue to implement FCA Guidance.

The current pandemic continues to create problems for individuals and businesses in many areas and insurance cover is but one of them. We are also hearing of instances where insurance is being cancelled because customers feel that they cannot afford the premium or finance payments.

The FCA has again published proposals on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of coronavirus (Covid-19), after 31 October 2020, when previous guidance is set to expire.

Temporary measures have been in place since May this year, then updated in August and we alerted firms to the published FCA guidance. We also indicated that the FCA was running a programme of contact with insurers and brokers to identify the extent of assistance that was being given to customers in need of help with premium or premium finance payments.

The August guidance was designed to enable firms to act quickly to deliver immediate and temporary support to their customers as the coronavirus pandemic and the Government’s response to it evolved.  

It can be found using the following link: https://www.fca.org.uk/publication/finalised-guidance/coronavirus-customers-temporary-financial-difficulty-updated-guidance-insurance-premium-finance-firms.pdf

The proposed guidance supplements the existing guidance and sets out how firms should provide tailored support to consumers who have already had a payment deferral and those newly in financial difficulty due to changed circumstances relating to coronavirus.

This too can be found by using the following link: https://www.fca.org.uk/publication/guidance-consultation/coronavirus-customers-financial-difficulty-additional-guidance-firms.pdf

This guidance supplements the August guidance and sets out FCA’s expectations of firms when dealing with customers who:

·      have benefitted from the August guidance (including payment deferrals granted under that guidance) and remain in financial difficulty;

·      experience financial difficulty because of circumstances relating to coronavirus after the August guidance is no longer generally in effect.

The elements of the guidance that apply to insurers and insurance brokers only apply to eligible complainants as defined in DISP 2.7.3R.  This includes natural persons and small business customers.

The FCA has indicated that:

“The measures in this guidance differ from the measures in the earlier guidance, for example:

·      Firms are not expected to proactively contact all consumers who miss payments.

o  Though, they should still consider whether it’s appropriate to contact a customer to offer support if they have missed a payment.

o  They should also consider what steps they should take where a customer could be vulnerable.

·      The specific expectations on forbearance measures in the premium finance sections of the guidance have been limited to regulated credit agreements and so will not apply in relation to non-regulated instalment payment arrangements (such as pay as you go arrangements) though firms are not prevented from applying the measures set out in the guidance to such arrangements.

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.”

We do not wish to regurgitate the details but ask that you please take the time to read the guidance papers so that you can offer as much help and assistance to your affected customers as possible.

It is also worth reminding you that the FCA has stated some “Governance and Oversight” requirements:

·      The Senior Manager accountable for providing support to consumers under this guidance should critically review the firm’s policies, procedures and controls and ensure they are appropriate to meet the needs of customers seeking support.

·      Executive committees and the Board are responsible for ensuring the function(s) providing customer support in line with this guidance is appropriately resourced and demonstrates a supportive, customer-focused culture.

·      Firms must keep records of the support offered to customers. They should keep a record of both generic information presented to all customers, and any personalised information presented to a particular customer.

Firms should encourage customers to keep in touch in order to ensure the firm continues to understand;

·      the circumstances that apply;

·      the appropriate covers to provide; and

·      the need for continued payment deferral.

Be aware that as part of their ongoing monitoring previously referred to, FCA supervisors may request access to a firm’s records and the outcomes of a firm’s customer monitoring.

If you need to discuss any aspect of the FCA’s guidance with us, please make contact in the normal way.