UK Extends Credit Card, Insurance Cancellation Rules

By Martin Croucher
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Law360, London (April 1, 2021, 4:16 PM BST) -- The finance watchdog has said that it will extend indefinitely its rules for U.K. banks and insurers on the fair treatment of customers seeking refunds for cancellations linked to the coronavirus pandemic.

The Financial Conduct Authority said it will extend its COVID-19 rules, which stipulate that insurers should not make policyholders go to "unreasonable lengths" when they attempt to make a claim for canceled holidays or weddings. The rules also require bank card providers to avoid delays on requests for money to be returned.

The rules, introduced in October 2020, were due to expire in April. The watchdog said on Thursday that it will extend the rules indefinitely under the "exceptional circumstances" of the pandemic after it launched a two-week consultation in February.

"We will keep this guidance under review as the wider situation relating to COVID-19 develops and will consider whether we should make the guidance permanent, either in its current form or with some changes to the guidance," the FCA said on Thursday. It will launch a full consultation with the industry if the guidance becomes permanent.

The rules were introduced as many consumers were denied refunds from travel companies or event organizers over holidays or weddings that were canceled amid the national COVID-19 lockdowns. Policyholders would typically claim a refund through their insurance policies or through a so-called chargeback, or refund, from their credit card provider.

Insurers should not impose onerous requirements on customers to exhaust all options before claiming on their policies, the guidance says.

The City watchdog said that email records that prove the policyholder has tried to get a refund should be sufficient, and customers should not have to go as far as initiating legal proceedings against travel companies to prove they have attempted to get their money back.

The watchdog also said that credit card companies should process refund requests within a reasonable time. "If there are delays in processing claims, firms should clearly explain the reason," the regulator added.

The Association of British Insurers, a trade body, said in February that the industry expected to pay out an estimated £152 million ($210 million) in travel insurance claims and £121 million on other types of insurance, including event and wedding cancelations.

--Editing by Joe Millis.

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