| Link(s): | Financial watchdog consults about protections for insurance customers in financial difficulty | FCA CP23/1: Insurance guidance for the support of customers in financial difficulty | FCA |
Context
As part of its ongoing work to help protect customers during the current cost of living squeeze, the FCA is proposing to update guidance introduced during the Covid-19 pandemic to support insurance customers in financial difficulty. This is intended to provide clarity to firms about how they should support all struggling customers, not just those facing problems due to the pandemic.
Key points to note
The consultation is written in the context of the forthcoming Consumer Duty, with references to the new Principle 12, “A firm must act to deliver good outcomes for retail customers”, and includes reference to the FCA’s previous work on vulnerable customers.
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.
The FCA has already urged insurers and brokers to treat their customers fairly by not undervaluing insured items or charging unnecessary add-ons and unfair penalties, such as increased interest for those facing financial difficulty.
In terms of scope, the FCA is proposing to broaden the guidance to all firms subject to ICOBS and relates to both retail and commercial customers of non-investment insurance policies. The FCA says “This is consistent with the approach in the Consumer Duty, but is broader than our Covid guidance which only applied to eligible complainants in DISP 2.7.3 R (which included natural persons and small business customers).”
The consultation closes on 11th March 2023.
Next actions
None – for information and awareness.