The FCA has called on the industry to better consider the needs of those in financial difficulties as part of its strategy to deliver good outcomes for consumers across the financial services industry and to provide clarity to firms on how they should support struggling customers beyond those hit by the pandemic alone.
In particular, the FCA looks to address issues such as:
The potential to signpost customers towards more suitable products when they are facing financial difficulties
Waiving cancellation fees to help facilitate switches in these circumstances
Removing fees associated with adjusting customers’ policies
The guidance highlights that 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 the policies.
Sheldon Mills, executive director, consumers and competition at the FCA, comments: “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 update comes on the back of the FCA urging both brokers and insurers to be fair to customers including 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.
A consultation on the proposed changes will end on March 11.