The Association of Mortgage Intermediaries (AMI) has welcomed the changes insurers have made following the Financial Conduct Authority’s (FCA) guidance on 14 May.
The FCA’s guidance for insurance and premium finance firms is aimed at helping customers who may be facing financial difficulties due to coronavirus. It applies to GI and protection contracts and aligns the assistance available to options provided for other financial products, such as mortgages and unsecured loans.
AMI is supportive of insurers who allow customers to pay back deferred payments over a period of months, as 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. This ensures that cover such as protection continues uninterrupted.
The trade body sys 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. Some insurers have already confirmed this, and AMI encourages transparency from other insurers.
Within their statements on payment deferrals many insurers have recommended financial advice. 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, AMI said.
Stacy Reeve (pictured), 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.
“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. Ensuring that customers maintain appropriate cover has got to be the aim.”