Car insurance firms must waive fees and allow delayed payments, says watchdog 

The Financial Conduct Authority instructs car insurers to try and save customers money and allow deferred payments

Shopping around for car insurance

Car insurance firms have been instructed to waive fees and allow delayed payments in order to help customers who are experiencing financial difficulties due to the coronavirus pandemic.

The Financial Conduct Authority (FCA) has told car insurers that they must waive cancellation and other fees that customers usually have to pay when adjusting their policies, as well as reassessing customers’ risk profiles in order to see if their premium can be lowered.

Firms must also consider whether there are other products they can offer which would suit a customer’s needs better than what they’re currently signed up to, and revise their cover accordingly. For a car insurer, this could mean reviewing whether a customer still needs an add-on they have - such as key cover - or if they could be moved from a fully comprehensive policy to a third party one.

These requirements are designed to reduce the payments of customers who pay monthly, or result in a partial refund for those who pay the full annual premium up front.

Deferred payments

If no amendments can be made to a customer’s cover to alleviate their payment difficulties, the FCA expects insurers to defer payments for between one and three months. Firms can choose to defer a customer’s payments for more than three months if they wish to do so and it’s in the customer’s best interests.

In cases where a payment deferral is not appropriate, the FCA says insurers should look into other options, such as accepting reduced payments, waiving missed or late payment fees, or allowing a customer to amend their repayment date at no additional cost.

Firms are also expected to review interest rates to ensure they are fair, as well as encouraging customers to contact them if they are having difficulty making payments.

The measures were the result of a brief FCA consultation and will come into effect on 18 May 2020.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus. The majority of respondents expressed support for the proposals we published at the start of May.

“Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals. The measures confirmed today will provide urgent support to those that need it.”

Tell us about your experiences with car insurance companies during the coronavirus pandemic in the comments...

Recommended

Illegal car modification hotspots revealed
Volkswagen Polo exhaust
News

Illegal car modification hotspots revealed

Gloucestershire has the highest proportion of illegal car modifications, with altered number plates the most common breach
14 Jun 2021
Free car insurance for people getting vaccine
Car insurance
News

Free car insurance for people getting vaccine

Three hours’ temporary insurance cover given away; drivers need only email a picture of the vaccination card to redeem offer
7 Jun 2021
What is car GAP insurance?
Long-term test review Mazda MX-5 - Lesley showroom
Tips & advice

What is car GAP insurance?

We explain GAP and finance GAP insurance for cars, and ask whether you really need it
20 May 2021
Cat S and N cars: new insurance write-off categories
Car crash
Tips & advice

Cat S and N cars: new insurance write-off categories

New Cat S and Cat N insurance write-off classifications have replaced the old Cat C and Cat D groups; we explain all.
5 May 2021

Most Popular

Exclusive: banned 71-reg number plates released
Number plates
News

Exclusive: banned 71-reg number plates released

Latest DVLA list of banned UK registrations reveals which 71-plates are too rude for the road
21 Sep 2021
Volvo to ditch leather in all cars by 2030
Volvo interior
Volvo

Volvo to ditch leather in all cars by 2030

New C40 Recharge will be first Volvo to be offered without the option of leather upholstery
23 Sep 2021
£6k Citroen Ami electric city car gets green light for the UK
Citroen Ami UK - front static
Citroen

£6k Citroen Ami electric city car gets green light for the UK

The Ami is coming to the UK with a price tag of around £6,000, making it one of the cheapest ways to get a new car today
22 Sep 2021