Millions of insurance customers could have fees waived for cancelling policies

MILLIONS of insurance customers cold have fees waived under new guidance set out by the financial regulator.

Customers struggling to pay their insurance bills will receive new support to ensure that they don’t miss out on the protection offered by their cover.

Households struggling to pay their insurance premiums are being urged to contact their insurer first

Households struggling to pay their insurance premiums are being urged to contact their insurer firstCredit: Getty

The Financial Conduct Authority (FCA) is reminding insurance firms that they must follow a number of steps when a customer is facing financial distress.

In the first instance, insurers should help struggling customers by reassessing their needs. 

They should consider whether they have a cheaper policy that would be more suitable for the customer.

Firms should also waive any fees if they do move a customer on to a different policy.

When you cancel a policy, you usually have to pay a fee. But the FCA said that those in financial difficulty should not have to pay these charges.

It has urged insurers to find a way to avoid a customer cancelling cover in the first instance.

The FCA will also remind insurance firms that they must provide clear information to consumers about the additional costs of added extras.

This includes things like key cover as an option with car insurance or boiler cover as an added extra with home insurance.

All firms must also consider whether cancellation fees should be removed for any customer in financial difficulty.

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

“Firms should not unfairly penalise them for any payment difficulties but instead work with them to find solutions. 

“We want people getting the cover they need at a cost they can afford so both business and customers benefit.” 

The Financial Conduct Authority (FCA) has warned insurance firms that it will intervene if they fail to protect customers as the cost of living continues to soar.

The FCA is taking action to support households, by writing to insurance industry chief executives to make sure that they are protecting customers in distress.

The guidance comes as millions of households face a cataclysmic cocktail of rising bills due to the falling value of the pound, high inflation and rising interest rates.

The watchdog said that if customers face increasing difficulty paying bills or repaying debts, the impact on them is unlikely to be purely financial.

They will also face pressures on their physical and mental health, which in turn could worsen the impact of their financial difficulties.

Customers struggling to pay their insurance bills should always phone their provider in the first instance to help discuss their options.

Policy holders should not cancel their insurance before asking their provider about the support that’s on offer.

The FCA also reinforced their guidance that firms must continue to provide clear information when customers renew their policy to help them decide whether they want to go ahead or shop around for a better deal. 

The regulator also encourages customers to continue to shop around to find the best deal.  

How do I complain to my insurance company?

If you’re unhappy about the way your insurance company has treated you, in the first instance you should complain to them directly.

Under FCA rules, insurance companies and other financial services must respond to your complaint within eight weeks.

You’ll usually be able to submit your complaint on your insurers website, via email or letter.

Make sure you include as much detail in your complaint as possible and remember to state how you want the issue to be resolved.

If the matter has not been resolved in eight weeks and you wish to take the complaint further, you can take it to the Financial Ombudsman Service.

You can complain about your firm on the Ombudsman’s website.

The service should answer complaints within 90 days of receiving it.

Typically, your case will be addressed by a “handler” who will review all the paperwork and evidence provided by both sides.

They will then speak to both parties and recommend how the complaint could be resolved.

If you accept the handler’s recommendations, a case can be resolved in just a few weeks.