Among the issues it looks to address are:
- 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
According to Sheldon Mills, executive director, consumers and competition at the FCA, maintaining access to insurance “is vital”.
“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,” Mills said.
The update comes on the back of the FCA urging both brokers and insurers to be fair to customers, such as not undervaluing items, and avoiding charging unnecessary add-ons or applying unfair penalties that would increase costs for those in difficulty.
The FCA’s actions are part of its strategy to deliver good outcomes for consumers across the financial services industry.
In reaction to the latest guidance, Branko Bjelobaba told Insurance Business that the move was “timely” but more was needed.
“I would be appalled if any insurers, brokers or premium finance providers were exploiting customers right now,” he said. “We had rules come into force last year to ensure that renewing motor and home products were priced the same as the equivalent new business and we’ve also had round one of the product value assessments process which has been a lamentable failure as most insurers simply did not do what was required to evidence that their product could be signed off as providing fair value once they had also considered the broker’s own assessment of the services that they, and anyone else in the chain, was providing (and whether these also provided fair value).
“What has disturbed me is that some are resorting to high charges for administrative changes that the commission already paid should be covering and are continuing to drive up the costs of finance. Those rules are there to ensure that fair value is provided and apply equally to everyone in the chain. Financial difficulties will be experienced by many and this is not the time to exploit these vulnerabilities and while the FCA is to be applauded they really need to bottom out what we already have in place which is a core part of the incoming Consumer Duty.”
