The Financial Conduct Authority (FCA) has implemented temporary measures to help insurance and premium finance product customers who may be struggling financially as a result of the health crisis.
The regulator announced its intention to take action earlier this month and gave an abbreviated consultation period for responses.
From Monday 18 May, customers should be able to request a payment deferral at any point up to 18 August 2020.
Where a payment holiday is not the best option for customers, firms should offer reduced repayments, or reschedule the term; waive missed or late payment fees; or allow a customer to amend their repayment date without any cost.
Firms will also need to consider whether other products are more suitable to meet a customer’s needs or whether cover needs to be revised.
As an example, a car insurance customer may no longer need a key cover add on, or they could be moved from a fully comprehensive to a third party fire and theft policy.
By re-assessing the risk profile of customers, there may be scope to offer them materially lower premiums, the FCA said.
They will also be required to waive cancellation and other fees associated with adjusting customers’ policies.
In taking these actions, the FCA said this could result in a reduction in monthly premiums for those paying in instalments, or a partial refund for customers who have paid upfront.
Where insurance cover changes do not help alleviate payment difficulties, the FCA said it expects firms to grant customers a payment deferral of up to three months “unless it is obviously not in the customer’s interests to do so”.
And, in a bid to treat customers fairly, firms will also need to review interest rates associated with instalments.
Websites and apps
Further, websites and apps should state what solutions are available to customers and encourage them to contact firms if they’re experiencing financial difficulties.
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.
“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.”
The measures will be reviewed in the next three months.