The Association of Mortgage Intermediaries (AMI) wants insurers to be clear on how they will treat commission payments during a customer payment deferral. The trade body says a sensible and fair approach would be for commission not to be affected at all.
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Mortgage brokers must also be told what other types of support insurers are offering policy holders so they can advise them on the best option for their circumstances, which may not always be to defer paying their premiums.
Insurers that allow policy holders to pay back their paused premiums over a period of months rather than in a lump sum have the backing of the trade body, which says this approach will encourage customers to keep their cover in place instead of a cancelling their direct debit.
The Financial Conduct Authority (FCA) announced the introduction of temporary measures to support insurance customers last week. From 18 May, customers should be able to request a payment deferral at any point up to 18 August 2020.
If a payment holiday is not the best option for the customer, 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.
Stacy Reeve (pictured), senior policy adviser at AMI, said: “Communication between insurer and intermediary is key so that the help can reach those customers who need it the most. The FCA has been clear that they will want to see firms across the distribution chain working together to ensure that customers are treated fairly, so joined-up communication is vital.
“Intermediaries may wish to use this FCA guidance to ignite protection discussions with their customers. Customers may be actually or potentially vulnerable and the uncertain situation we find ourselves in can be very unnerving for many. Ensuring that customers maintain appropriate cover has got to be the aim.”
