FCA publishes draft updated guidance for insurance and premium finance firms on coronavirus and customers in temporary financial difficulty

The proposals extend the temporary measures to help customers who are in temporary financial difficulty because of Covid-19

The original measures came into force on Monday 18 May and the FCA is now proposing to extend the guidance for a further 3 months, until 31 October 2020 (although certain, specific parts will continue beyond that date). It is also proposing to set out more clearly its expectations on how firms should treat customers still in financial difficulty at the end of a payment deferral.

They are also taking the opportunity to:

•  canvass views on whether aspects of the guidance should apply on a permanent basis; and
•  invite stakeholders to provide input on its guidance for insurance firms on product value and coronavirus, to inform a review it proposes to undertake later this year. It’s questions in this regard are:
  •  Do you think the sections of the draft updated guidance that set out expectations for how insurance distributors should consider supporting customers in financial difficulty (excluding the expectation to grant payment deferrals and review interest rates) should be made permanent and applied to any situation in which customers are in financial difficulty, including those unrelated to coronavirus?
  •  Do you have any feedback on our product value and coronavirus: guidance for insurance firms to help inform our review of the guidance, which we indicated that we intend to carry out within 6 months of its publication?

    
    

Its approach on these questions will involve further engagement with stakeholders and this will not be the only opportunity to register views.

The draft updated guidance sets out the FCA’s expectations for firms when considering the fair treatment of existing customers in financial difficulty, due to circumstances arising from coronavirus. The aim of the guidance is to prompt firms to help customers, where possible, to:

•  reduce the impact of temporary financial distress
•  ensure they have insurance that meets their demands and needs

As this is not considered by the FCA to be a statutory consultation, the FCA has requested feedback in short order - by 5pm on Tuesday 28 July 2020. If confirmed, the updated guidance will come into force by 18 August 2020.

There are still customers in temporary financial difficulty directly as a result of coronavirus and the wider economic impact it has had. We think it is important that we renew this guidance now so that firms continue to treat these customers fairly.

https://www.fca.org.uk/publications/guidance-consultations/coronavirus-customers-temporary-financial-difficulty-draft-updated-guidance-insurance