Financial Conduct Authority
Financial watchdog consults about protections for insurance customers in financial difficulty
The FCA is proposing to update guidance, introduced during the Covid-19 pandemic, to support insurance customers in financial difficulty.
As part of the FCA’s ongoing work to help protect customers during the current cost of living squeeze, this will provide clarity to firms about how they should support all struggling customers, not just those facing problems due to the pandemic.
For example, under the guidance, insurers should consider whether a different product is more suitable for customers facing financial difficulties and whether they should waive cancellation and other fees associated with adjusting customers’ policies.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said:
‘Access to insurance is vital, providing peace of mind and security in case things go wrong.
‘By extending our guidance we are helping consumers keep that safety net, and ensure they’re properly supported when they claim, even as the cost of living increases.’
The FCA has already urged insurers and brokers to treat their customers fairly by not undervaluing insured items and charging unnecessary add-ons and unfair penalties, such as increased interest for those facing financial difficulty.
FCA rules also mean that firms must make sure the information they provide customers is fair, clear and not misleading, so customers can make informed decisions.
The FCA’s actions are part of its Strategy to deliver good outcomes for consumers in the UK’s world leading financial services industry, which has widely recognised and respected high standards.
Notes to editors
- A consultation on the proposed changes will end on March 11, 2023. Read CP23/1.
- In 2021, the FCA introduced measures to stop loyal customers from paying higher prices for their insurance because they renewed repeatedly with their current providers.
- The FCA set out in a Dear CEO letter in September 2022, that it expects, amongst other things, that firms handle claims promptly and fairly and make sure customers get access to fair value products.
- In December 2022, the FCA also warned motor insurance firms not to undervalue complete write off claims.
- The FCA has guidance firms should follow about the fair treatment of consumers in vulnerable circumstances.
- The FCA’s new Consumer Duty will require firms to act to deliver good outcomes for retail consumers, and make sure that they are supported while using a financial product, including when they make claims.
- Today’s publication builds on what the FCA has already done to make sure firms treat customers fairly and support those struggling financially due to the rising cost of living:
- Reminding 3,500 lenders of how they should be supporting borrowers in financial difficulty. 32 firms have been told to make changes to improve the way they treat customers and, so far, 7 of these firms have voluntarily agreed to pay £12m in compensation to nearly 60,000 customers.
- Secured improvements to unfair terms and conditions for Buy Now Pay Later customers, ahead of regulating the market.
- Telling banks to improve the way they treat struggling small business owners when collecting and recovering debts.
- Urging insurers to support struggling customers and to make sure customers are protected from unnecessary products and unfair penalties.
- Warning firms about unsuitable credit promotions. As a result of the FCA’s work nearly 8,000 adverts have been amended or withdrawn, helping to protect consumers from being misled.
- The FCA has set out ways that customers can get advice about dealing with cost of living pressures.
- Find out more information about the FCA.
Original article link: https://www.fca.org.uk/news/press-releases/financial-watchdog-consults-about-protections-insurance-customers-financial-difficulty
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