Just last month the FCA reached out to heads of business to highlight their expectations on businesses and urge them to mobilise in order to support customers impacted by cost-of-living increases.
The communication highlighted the FCA’s concern for those customers in the poorest households who will be hit the hardest. They cite that the poorest households may face average inflation rates of 14%. This is in the context of a quarter (27%) of the population having low financial resilience which is expected to further increase over the coming months.
Therefore, there is the expectation there’ll be customers who’ll find it harder to keep up with financial commitments which may lead to an impact to their physical and mental health and in turn worsen their financial difficulties. Because of this, The FCA are clear that firms must be treating those who borrow from them fairly.
As a Paymentshield customer may enter a credit agreement with us if they choose to make monthly payments, we understand the need to make sure we offer support to any policyholders struggling to keep up with payments and make sure we don’t add to their struggles.
Thankfully, this has already been a top priority within Paymentshield for a number of years. Indeed, in 2020 during the covid pandemic we introduced the option for customers to opt to move to a policy offering them a 3 month payment holiday at the start of their policy if they were struggling to keep up with their payments to us during lockdown. Despite lockdown lifting and people getting back to work, we have maintained these measures because we understand that people are still struggling, and we believe it’s the right thing to do to offer solutions when needed.
So, here’s how Paymentshield are already delivering against the FCAs expectations
“Provide your customers with an appropriate level of care and support”
We’re committed to supporting all our customers but recognise that some may need more help than others, especially during tough times.
The entire Paymentshield team receive training to understand when and how we might need to offer additional support with our Customer Care Team receiving much more in depth training to help identify those customers that might need extra help and to learn how to adapt their approach to support the customer as much as possible.
Where the need for support has been identified we’ll make sure that this is flagged on our system so for any future interactions our agents are quickly alerted in order to provide the best possible outcomes for the customer.
“Support borrowers showing signs of financial difficultly or struggling with debt”
We’ve got a dedicated team who are trained and regulated to be able to check if your client’s policy still meets their needs and budget, who can make recommendations for changes on your behalf. If your customer contacts us and are concerned about keeping up with payments on their policy, our team might advise on how the customer might change elements of their existing policy to reduce their payment or even recommend moving to a new policy. Where we offer this service on your behalf,
If a customer misses a payment, we always give a customer 45 days from their payment due date to make their payment to us and will only ever cancel the policy 10 days after a second payment is missed and after reaching out to the customer to try and offer them some support.
If a customer is struggling with their finances, then we’re able to share contact details of support services available such as the Citizens Advice Bureau. We can also offer information on other support groups and charities that can support customers through times of short and long-term financial challenges. Where we identify a customer might need more specialist support than we're able to provide, particularly in terms of their mental wellbeing, we'll provide a referral to the mental health charity Mind.
“Ensure that any fees and charges levied on borrowers in financial difficulty are fair”
Paymentshield do not charge a default fee if a customer misses a payment, nor do we chase debt or leave default records for non-payment helping to avoid pushing the customer into further financial hardship or distress.
“Make sure your approach to taking on new borrowers takes account of the financial pressure they may be facing”
We’re proud to support the adviser market and recognise that the majority of the new customers we see, will have gone through an advised conversation which would take into consideration the financial circumstances of the individual and the budget they have available for insurance. However, we also recognise our responsibility to ensure we consider the financial pressure people might be under while still needing to make sure their home is properly protected.
We regularly review our APR to ensure it remains competitive and represents good value for the customer as well as providing every customer with the option to choose either an annual payment or a monthly payment depending on what is better for their financial circumstances. If they choose to pay monthly there’s also a range of payment options so the customer can choose if they want to pay over 9 or 12 months. There’s no deposit to pay up front when choosing to pay monthly and their payments will be in equal instalments over the time period they choose making it easy for customers to be able to manage their monthly budget.