Financial Conduct Authority  

FCA asks struggling SMEs to come forward

FCA asks struggling SMEs to come forward

The regulator has called on small and medium sized companies which have been unable to claim on their insurance policies during the coronavirus crisis to contact the regulator as part of its plans to put together a High Court test case.

In an update on its website today (May 15) the Financial Conduct Authority warned there was "continuing and widespread concern" about the lack of positive response from business interruption policies, which can sometimes cover a firm for loss of income due to an unexpected event. 

At the beginning of the month the watchdog announced it intended to place before the courts a sample of cases in which it was uncertain whether a business was covered by its business interruption insurance for losses caused by the virus fallout.

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Now the FCA is inviting SMEs that have "unresolved disputes with insurers" over business interruption policies to get in touch with the regulator if they want their concerns taken into account as part of the court test case. 

The regulator said it would use these "arguments, policies and fact patterns" in its court proceedings, with the result of the test case set to be legally binding on the insurers which are involved in the sample used. 

The FCA said: "The coronavirus pandemic will have affected policyholders in different ways. The issues relevant to the intended proceedings will therefore be wide-ranging and complex.

"We recognise that the intended proceedings will better achieve our consumer protection and market integrity objectives if they cover as broad a cross section of policies and issues as is compatible with an expedited court process." 

The FCA has previously confirmed it did not intend to resolve all possible disputes involving business interruption policies, but hoped court clarity on policy wording would "resolve some key contractual uncertainties".

The court action was intended to help both insurers and the insured, the regulator said, but would not determine how much should be paid under individual policies.

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