Information for firms on the impact of coronavirus on consumers, including access to cash, accessing restricted savings and handling consumer claims.
Our rules already provide flexibility to firms in a number of areas and we expect them to use this flexibility to support consumers, bearing in mind customers’ individual circumstances.
For example, a number of firms have taken some steps to enable customers’ access to cash, such as waiving fees for individual savings accounts (ISAs) and allowing them to end their term deposits early.
We welcome firms taking initiatives going beyond usual business practices to support their customers. When doing so, firms should notify us so we can consider the impacts and offer support as appropriate.
We know that coronavirus and the associated public health measures are causing many firms serious practical challenges, including in their operations dealing with consumer complaints. Find out more about how firms should handle complaints during coronavirus.
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When handling claims, insurers must treat customers fairly. In part, this means providing reasonable guidance to help a policyholder make a claim, not unreasonably rejecting a claim and settling claims promptly.
Insurers will also understand that the coronavirus pandemic is a stressful time for some customers and we expect them to take this into account when dealing with claims. For example, some customers submitting a travel insurance claim might also have a right to claim the cost of cancelled travel arrangements from their credit card provider. Where this is the case, insurers should consider how best to handle the claim to ensure that the customer is treated fairly and not raise unreasonable barriers to making a claim.
Where consumers have two potentially valid avenues of redress against regulated firms (eg from an insurer and credit provider) there is nothing in our rules that stops an insurer, credit provider or other regulated firm settling the claim in full (so long as there is no disadvantage to the consumer in this) and, where appropriate, seek to claim back from the other firm involved.
Firms can also agree a convention with the other provider as to how these sorts of arrangements might work efficiently without having a negative impact on consumers.
Regulated firms may need to consider issues such as any limits on recovery, for example, limits on insurance cover in these arrangements and how those can be addressed to minimise harm to consumers. Historically, this has not been a significant issue for consumers. But, given the current strain on the travel market the complexity involved in getting a refund has become clearer.
On 2 October 2020, we published temporary finalised guidance outlining our expectations of firms when helping customers who are trying to claim money back following a cancelled trip or event. We also published feedback received from the Guidance Consultation we published on 31 July, where we received responses from a mix of firms, trade bodies, and consumer organisations.
We are working with the Bank of England and the Payment Systems Regulator to understand problems consumers may have accessing cash, and ensure the UK learns the lessons from other countries’ experience of coronavirus.
UK firms have taken steps to help ensure consumers have access to cash, including the raising of cash machine withdrawal limits.
We are confident electronic payment providers have capacity to cope with the potential changes in transaction numbers.
We recognise that a growing number of people may use online or phone banking services, in some cases for the first time. Firms should continue to help vulnerable consumers access their banking services – online or over the phone. Firms should also remind consumers to be aware of fraud and protect their personal data.
During the coronavirus crisis, consumers may find themselves needing access to their savings in accounts with restrictions on access. According to Citizens Advice nearly two in five (38%) people have seen their income decline, with nearly one in 12 (8%) losing 80% of their household income or more.
Research conducted by YouGov on behalf of the Standard Life Foundation also shows that one in five consumers (21%) has used some form of savings to make ends meet in recent weeks.
Data from the Financial Lives Survey suggests that several million people may have restricted savings as their only form of savings. If they cannot access their savings, they may be unable to cover essential outgoings, or need to take on additional debt instead. The YouGov/Standard Life Foundation research also found that 19% have used credit to make ends meet in recent weeks.
Customers may contact firms asking to withdraw funds from these accounts. As ever we would expect firms to:
- pay due regard to the interests of their customers and treat them fairly (see Principle 6 and BCOBS 5.1)
- communicate in a way that is clear, fair and not misleading (see Principle 7 and BCOBS 2.2), and
- consider the needs of vulnerable customers in their actions or communications (see Principles 6 and 7).
Meeting these obligations does not require firms to offer access to all customers, or to offer unlimited access to funds in a restricted-access account. Firms are free to form a judgement on a case by case basis, balancing their customers’ needs with their own obligations, including managing their prudential risk.
However, in doing so, firms should also be aware that for some people the impact of coronavirus is likely to exacerbate the personal circumstances that can cause vulnerability. It may also cause consumers who would not normally think of themselves as vulnerable to suddenly face personal circumstances that can cause vulnerability, such as a sudden and significant loss of income.
In deciding how to respond to customers in a way that is consistent with the above obligations, firms should consider the customer’s vulnerabilities and the impact that an inability to access funds would have. Relevant factors that firms may want to consider in doing so include the reason for the request (for example, whether the withdrawn funds would be used to pay for essential goods and services), or the consumer’s access to other forms of income such as Universal Credit.
We welcome the steps several firms have already taken to allow access and to waive penalty fees or charges on restricted savings products. We will monitor customer demand for access through our contact centre engagement with consumers, and use our usual supervisory engagement with firms to understand how they are approaching the issue. We will keep the situation under review.