Credit, Collections & Insolvency News
The Financial Conduct Authority (FCA) has urged insurers to treat customers fairly amid concerns that the cost of living crisis may prompt households and businesses to cut back on insurance, leaving them without adequate protection – or with none at all.
In a letter to Chief Executives in the insurance industry, the FCA has called on firms to ensure consumers are not sold unnecessary products or add-ons, It has also warned against issuing unfair penalties. The regulator has asked insurers to reassess customers’ needs, provide clear information and waive fees associated with adjusting a customer’s policy. Advising customers who are struggling with their finances to contact their providers as soon as possible.
Customers, including businesses, in financial difficulty are also more likely to need to pay for their insurance monthly through premium finance. They may also be the most affected by general interest rate rises and have a higher likelihood of not being able to make a payment.
If customers face increasing difficulty paying bills or repaying debts, the impact on them is unlikely to be purely financial. Consumers will be more likely to face pressures on their physical and mental health, which in turn could worsen the impact of their financial difficulties.
Firms can help customers in financial difficulty by:
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said “Customers who are struggling with their finances should contact their providers as soon as possible. We encourage customers to continue to shop around to find the best deal. Firms should not unfairly penalise them for any payment difficulties but instead work with them to find solutions.”
“We have a thriving and efficient insurance sector, and we want people getting the cover they need at a cost they can afford so both business and customers benefit.”
Since the cost of living squeeze began, the FCA has reminded 3,500 lenders how it expects them to support borrowers who get into financial difficulty.
Although the FCA does not yet regulate Buy Now Pay Later (BNPL) products, the FCA met unauthorised BNPL providers to encourage these firms to provide their customers with an appropriate level of care and support.
The FCA has also told banks to improve the way they treat struggling small business owners when collecting and recovering debts and warned firms about unsuitable credit promotions. As a result of the FCA’s work nearly 4,000 adverts have been amended or withdrawn, helping to protect consumers from being misled.
