The Financial Conduct Authority has written to insurance sector CEOs as part of a bid to protect consumers from “unnecessary products or add-ons and unfair penalties” during the cost-of-living crisis.
The financial services watchdog said that pressure on household bills might prompt some consumers to cut-back on insurance products, leaving them without protection against further unexpected costs.
It outlined a number of ways in which insurance providers could help consumers and it said that it would quickly intervene to protect customers from harm in instances where poor practise was found.
The FCA’s executive director for consumers and competition, Sheldon Mills, 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.”
Earlier this year car insurance providers were banned from quoting customers a higher price for renewing their motor and home insurance than they would pay if they were a new customer as part of new legislation introduced by the FCA.
This week, FCA said that insurance firms must continue to provide clear information when customers renew their policy to help them decide whether they want to go ahead or shop around for a better deal.
After highlighting that financial issues are also likely to impact customers’ mental health, the FCA said firms should offer help by:
- Reassessing customers’ needs
- Considering whether there are other products that better meet the customer’s needs
- Providing clear information to consumers about the additional cost of premium finance
- Working with customers to avoid the need to cancel necessary cover
- Waiving fees associated with adjusting a customer’s policy in line with the reassessments
- Considering whether cancellation fees should be removed for customers in financial difficulty
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, it also met unauthorised BNPL providers to encourage them to provide their customers with an appropriate level of care and support.