The Financial Conduct Authority (FCA) has published proposals on how firms should continue to help customers who hold insurance and premium finance products, and who may be in financial difficulty because of coronavirus, after 31 October 2020.
The guidance follows the temporary measures that have been in place since May this year.
The proposal outlines how firms should provide tailored support to consumers who have already had a payment deferral, as well as those newly in financial difficulty due to changed circumstances relating to COVID-19.
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For insurance arrangements, this includes measures such as: reassessing the risk profile of the consumer; considering whether other products can be offered; and providing help to avoid the need to cancel.
Where customers hold premium finance credit regulated agreements, help could include: allowing the customer to make no or reduced payments for a specified period; suspending, reducing, waiving or cancelling further interest or charges; and allowing the customer a reasonable time and opportunity to repay the debt, including by deferment of payment of arrears.
The measures differ from earlier guidance; for example, firms are not expected to proactively contact all consumers who miss payments, but should still consider whether it is appropriate to contact a customer to offer support if they have missed a payment.
Firms should also consider what steps they should take where a customer could be vulnerable.
The specific expectations on forbearance measures in the premium finance sections of the guidance have been limited to regulated credit agreements and so will not apply in relation to non-regulated instalment payment arrangements (such as pay-as-you-go arrangements), though firms are not prevented from applying the measures set out in the guidance to such arrangements.
Firms should make the different options available to consumers clear in their communications, including on their websites and apps, and encourage them to make contact if they are experiencing financial difficulties.
The guidance is open for comment until 5pm on Tuesday 20 October.