On 14 May, the FCA confirmed guidance to helping customers who may be facing financial difficulties
The FCA guidance applies to general insurance and protection contracts and aligns the assistance available to options provided for other financial products, such as mortgages and unsecured loans.
The Association of Mortgage Intermediaries (AMI) said it is supportive of insurers who allow customers to pay back deferred payments over a period of months. "The ability to stagger repayments rather than in one lump sum may encourage the customer to keep their cover in force, instead of cancelling a direct debit," said an AMI statement. "This ensures that cover such as protection continues uninterrupted."
It added that insurers need to be clear on how they deal with broker commission during a customer payment deferral and a sensible and fair approach would be for there to be no impact on commission. While some insurers have already confirmed this, AMI said it is encouraging transparency from other insurers.
"Within their statements on payment deferrals many insurers have recommended financial advice," said AMI. "It is crucial that customers understand the effects of deferring payments and receive advice to assess whether this is the best option given their circumstances. Mortgage intermediaries are well placed to provide advice and is why it is so important that insurers communicate clearly and promptly to intermediaries what customer assistance is available."
Stacy Reeve, senior policy adviser at AMI said: "Protection and general insurance advice during these times is more important than ever and intermediaries, many of whom have built strong relationships with their customers and are a trusted adviser, can help customers to understand the options available.
"Communication between insurer and intermediary is also key so that the help can reach those customers who need it the most. The FCA has been clear that they will want to see firms across the distribution chain working together to ensure that customers are treated fairly, so joined-up communication is vital."
He added that intermediaries may wish to use this FCA guidance to ignite protection discussions with their customers. "Customers may be actually or potentially vulnerable and the uncertain situation we find ourselves in can be very unnerving for many," he said. "Ensuring that customers maintain appropriate cover has got to be the aim."
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