Amid gloomier economic and financial conditions, regulators in the U.K. are looking to the insurance industry to help ease the pressure on financially strapped clients.
The U.K.’s Financial Conduct Authority (FCA) launched a consultation that proposes to update guidance that encourages insurers to support customers in financial difficulty. The guidance was initially introduced in response to the financial stresses that accompanied the Covid-19 pandemic.
The regulator said the revisions are intended to provide clarity to firms on how to support struggling customers generally, not just those who were financially stretched due to the pandemic.
For instance, under the proposed guidance, insurers would be expected to consider whether different products are more suitable for customers who are facing financial challenges, and whether to waive the fees associated with adjusting customers’ policies.
It would also require firms to ensure that clients have all of the necessary information about their options, and adequate time, to make decisions about their insurance needs.
The proposals follow recent efforts by the FCA to push insurers and brokers to “treat their customers fairly by not undervaluing insured items and charging unnecessary add-ons and unfair penalties, such as increased interest for those facing financial difficulty,” the regulator said in a release.
“Access to insurance is vital, providing peace of mind and security in case things go wrong. 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,” said Sheldon Mills, executive director, consumers and competition with the FCA.
The consultation on the proposed changes runs until March 11.
The FCA is aiming to finalize its revised guidance by July, which is when its new “consumer duty” is due to come into force that will set higher expectations for the standard of care firms give consumers.
“Under the consumer duty, firms are required to act in good faith towards retail customers, avoid causing foreseeable harm and enable and support retail customers to pursue their financial objectives,” it said.