FCA urges insurers to protect customers from 'unfair' penalties

The UK’s financial watchdog has written to insurance company chief executives asking them to make sure their customers are protected from unfair penalties and “unnecessary” products or add-ons during the cost-of-living crisis.

The Financial Conduct Authority (FCA) said it is concerned that as households face rising energy prices and inflation, some customers might cut-back on the insurance they need.

The authority explained that customers in financial difficulty, including both consumers and businesses, are more likely to need to pay for their insurance monthly through premium finance.

They may also be the most affected by general interest rate rises and have a higher likelihood of not being able to make a payment, it said.

The regulator warned firms that it will intervene if it finds poor practice taking place in the insurance industry.

“Customers who are struggling with their finances should contact their providers as soon as possible,” said Sheldon Mills, executive director, consumers and competition, FCA. “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."

Mills added: “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.”

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