Contents

• COVID-19: PRA statement on decision by insurance companies to pause dividends
• COVID-19: FCA guidance for pension providers and DB transfer advisers
• Signposting travel insurance for customers with pre-existing medical conditions: FCA addendum to PS20/3
• Remuneration principles in insurance and reinsurance sector: EIOPA opinion

Following a seasonal break, the next update will be published on 27 April 2020.

COVID-19: PRA statement on decision by insurance companies to pause dividends

On 8 April 2020, the Prudential Regulation Authority (PRA) published a statement welcoming the prudent decision of some insurance firms to pause dividend payments given the uncertainties associated with COVID-19.

COVID-19: FCA guidance for pension providers and DB transfer advisers

On 7 April 2020, the FCA published a webpage, which provides guidance for pension providers and deferred benefit (DB) transfer advisers in light of COVID-19. Topics covered by the Financial Conduct Authority (FCA) include:

• Information for firms providing income drawdown – the FCA has extended the implementation dates of the rules in PS19/21: Retirement Outcomes Review (other than those already in force) by 6 months until 1 February 2021. However, the FCA reiterates that to ensure that firms provide well-governed pension products that are invested appropriately and deliver value for money. These remain areas of supervisory focus. The FCA is aware that many consumers may want to discuss their pension with their provider and providers will want to give them information that helps them make better informed decisions. The FCA support this and refers firms to its guidance on giving consumers pension information without "advice" and guidance on FCA expectations of advisers giving defined benefit (DB) pension transfer advice.
• Guidance on giving consumers pension information without inadvertently providing advice – when communicating with customers, unless providers and operators are willing to comply with the conduct requirements for personal recommendations, they should be careful not to provide regulated advice, even implicitly, by steering the consumer to a specific course of action on their investments.
• Customers contacting providers to access their pension funds – providers are concerned that, in these uncertain times, some consumers might seek to access the funds held in their pensions, when they would not have done so otherwise, or without properly considering the downsides. The FCA reminds providers of their regulatory obligations and suggests that firms may need to revisit their risk warning processes to ensure that they are appropriate during the pandemic. The FCA gives a table of risk factors in the current climate that providers should look for and what they should make consumers aware of relating toidentified risk factors.
• Customers contacting providers to change and de-risk their investments – providers are concerned that customers might make these changes without properly considering the downsides. Among other things, the FCA states that warning customers about relevant risks to consider would not amount to a personal recommendation. This is as long as it is clear from the language and context of the warning that the firm wants to ensure the consumer makes a considered and informed decision. The FCA also refers to its guidance for firms on warning consumers about the implications of realising investments.
• Providers contacting customers – some providers have asked about communicating with consumers proactively, for example, by providing additional information with planned communications in the coming weeks and months. The FCA believes firms can provide additional balanced information where they consider it meets a current information need.
• Expectation of advisers giving DB pension transfer advice – the FCA notes that COVID-19 may mean more consumers take advice about transferring out of their DB pension scheme to a defined contribution pension scheme. It continues to expect firms to provide suitable advice, and to follow the existing Handbook rules and guidance. It gives guidance on how to demonstrate that transfers are suitable, how to address customer misconceptions and how to deal with consumers transferring against advice received.

The FCA has discussed the guidance with the Financial Ombudsman Service (FOS). The FOS has confirmed that, in deciding what is fair and reasonable in all the circumstances of a complaint, it would be one of the things that it will take into account if a customer brings a complaint about the firm's communications on surrendering investments at this time.

Signposting travel insurance for customers with pre-existing medical conditions: FCA addendum to PS20/3

The FCA has published an addendum to its February 2020 policy statement, PS20/3, on signposting travel insurance for customers with pre-existing medical conditions (PEMCs).

In PS20/3, the FCA introduced new signposting rules and guidance to help customers with PEMCs better navigate the travel insurance market and find affordable cover for their conditions. On a related webpage, the FCA explains that 20 responses to its consultation on proposed requirements were not reviewed due to a system error. This was an isolated incident and has not affected other consultations. The FCA has now analysed these responses and, in the addendum, outlines the comments made and how it has taken them into account.

Having regard to these responses, the FCA Board has confirmed and remade (but not replaced) the Insurance: Conduct of Business Sourcebook (Access to Travel Insurance) Instrument 2020 (FCA 2020/3). A new instrument made by the Board, the Insurance: Access to Travel Insurance (Confirmation, Remaking and Amendments) Instrument 2020 (FCA 2020/10), has been published alongside the addendum. It makes changes to two Glossary definitions: medical condition exclusion and medical condition premium. This new instrument states that its Annex comes into force on 1 June 2020, immediately after Annex A of FCA 2020/3 comes into force. The rest of the new instrument has the same commencement date as FCA 2020/3, which is 5 November 2020.

Remuneration principles in insurance and reinsurance sector: EIOPA opinion

The European Insurance and Occupational Pensions Authority (EIOPA) has published an opinion on the supervision of remuneration principles in the insurance and reinsurance sector. The comments received following a preceding consultation, and EIOPA's response to them, are contained in a feedback statement published alongside the opinion.

The opinion aims to enhance supervisory convergence by focusing on the supervision of the remuneration principles set out in the Solvency II Delegated Regulation. It is addressed to national supervisory authorities (NSAs) and provides guidance on how to challenge the application of certain principles by supervised undertakings.

EIOPA will start monitoring the application of the opinion by NSAs in two years' time.

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