October 31, 2020

Volume X, Number 305

Advertisement

October 30, 2020

Subscribe to Latest Legal News and Analysis

October 29, 2020

Subscribe to Latest Legal News and Analysis

October 28, 2020

Subscribe to Latest Legal News and Analysis

FCA proposes extension to temporary relief for insureds

The FCA has been reviewing temporary measures that came into force in the insurance and premium finance markets on 18 May 2020 because of the COVID-19 pandemic. In a statement released last week, the FCA announced its proposal to extend the series of temporary measures designed to help those policyholders, “who may be in temporary financial difficulties because of coronavirus.”

Background

In May 2020, the FCA drew up temporary guidance, to initially last for three months, which firms were required to implement when reviewing the options available to their customers during the COVID-19 pandemic.

For example, reassessing the risk profile of customers, allowing payment deferrals, waiving fees, and considering whether there were other products they could offer which would better meet the customer’s needs and revise the cover accordingly. For instance, motor insurance for those who are working from home and less likely to be on the roads.

The aim of these measures was to “reduce the impact of temporary financial distress” and to “ensure that customers continue to have insurance that meets their demands and needs.”

The guidance applies to insurers, insurance intermediaries and debt collectors. The guidance only applies to non-investment insurance contracts, i.e. general insurance and protection contracts. It does not apply to reinsurance products.

Proposal

The FCA is proposing to extend the guidance for a further three months, until 31 October 2020, noting certain, specific parts will continue beyond that date.

The aim is to set out more clearly the regulator’s  expectations on “how firms should treat customers still in financial difficulty at the end of a payment deferral.” The FCA has stressed it is important that customers do not leave themselves uninsured and that their insurance cover meets their demands and needs.

The FCA is also taking the opportunity to canvass views on whether aspects of this guidance could be retained to apply on a permanent basis.

Comment

This proposal signifies the FCA’s response to the continuing financial difficulty that exists directly because of COVID-19 and the wider economic impact it has had.

The FCA is clearly prioritising the practical needs of customers and thinks renewal of the measures is important, in order that firms continue to Treat Customers Fairly. Insures and lenders had until 28 July 2020 to respond. It remains to be seen how well the proposal is received by firms but it is expected to be universally supported by the industry.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 213
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK
Partner

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

Related Services

  • Litigation
  • Data Privacy & Cybersecurity
  • ...
44 121 222 3507
Rose Chaudry, Squire Patton, Commercial Litigation Lawyer, Tortious Contracts Attorney
Associate

Rose Chaudry is an associate in the Litigation team with expertise in general commercial litigation. Rose qualified in September 2015 after completing her training contract with the firm.

Rose regularly acts for a diverse client base, including individuals and companies, from SMEs to PLCs. Rose has experience advising on a wide-range of matters of both a contractual and tortious nature, including breach of contract, breach of warranty, debt recovery, professional negligence and insurance.

44 121 222 3146
Advertisement
Advertisement