Target Newsletter - Issue 186 February 2023

Paradigm Compliance Update

CP23/1: Insurance guidance for the support of customers in financial difficulty

By Matthew Blackburn Consultant (Technical Helpdesk)

Introduction The FCA has launched a consultation that sets out proposals to help protect clients who are in financial difficulty and hold non-investment insurance policies. The consultation also provides details of the Regulator’s expectations of firms in supporting their clients. If the proposals are confirmed then this guidance, that will apply to all insurance clients in financial difficulty, will replace previous guidance for insurance clients in financial difficulty due to the pandemic. Potential actions The proposed guidance is intended to help firms more clearly identify what they can consider doing to provide support to clients in financial difficulty with the result that clients are better protected, no matter which firm provides their insurance cover. Possible actions could include • Reassessing the client's risk profile; • Considering if other insurance products may provide the cover that’s needed at a more affordable price; • Adjusting cover to reflect the client's changing financial circumstances; • Working with clients to avoid the cancellation of important cover; and • Where a policy is adjusted or cancelled, looking at whether it is appropriate to apply payments of related fees and charges.

Reasonable steps The FCA also expects firms to take

‘reasonable steps’ to make clients aware of, and help them understand, what support

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