Customers in financial difficulty and coronavirus: Additional guidance for firms

The FCA has set out proposals on how firms should continue to seek to help customers who hold insurance and premium finance products and may be struggling financially due to Covid-19 beyond 31 October 2020.

The proposed guidance follows the temporary measures that have been in place since May and outlines how firms can provide tailored support to consumers who have already had a payment deferral and those new to financial difficulty as a result of the pandemic.

Measures for insurance arrangements include:

• Re-assessing consumers’ risk profiles to see whether they could be offered lower monthly payments;
• Considering whether other products can be offered which better meet a consumer’s needs; and
• Providing help to avoid the need to cancel necessary cover.

For customers holding premium finance products, help could include:

• Allowing the customer to make no or reduced payments for a specified period;
• Suspending, reducing, waiving or cancelling any further interest or charges; and
• Allowing the customer a reasonable time and opportunity to repay the debt, including by deferment of payment of arrears.

The proposed guidance does differ from earlier measures:

• Firms are not expected to proactively contact all customers who miss payments. However, they should still consider whether it’s appropriate to contact a customer to offer support if they have missed a payment. They should also consider the steps they should take where a customer could be vulnerable;
• The specific expectations on forbearance measures in relation to premium finance products 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). This does not however prevent firms from applying the measures set out in the guidance to such arrangements.

The FCA says firms should make the different options available to consumers clear in their communications, on their websites and apps, and encourage them to make contact if they are experiencing financial hardship.

The proposals are open for comment until 5pm on Tuesday 20 October.