NEWS: NCR Issues New Guideline About Insurance
Replacing Insurance While In Debt Review
People who enter debt review often decide to swap the insurance built into their credit to a new lower cost supplier.
These specialist insurance providers provide special cover for those in debt review in case they lose their jobs, become unable to work or even cover the entire debt if they die.
Credit providers often make decent profit on insurance on credit since few people claim. Lower repayments for this type of insurance can free up funds to rather be spent on food or on debts.
‘Some credit providers have been very difficult when it comes to swapping insurance’
Some credit providers have been very difficult when it comes to swapping insurance because they do not want to lose the revenue stream (and knowing that debt review clients are so good at paying every month).
Some credit providers say that insurance can only be swapped when the credit is first taken out. The new guideline referring to the Credit Life Regulations of 2017 says:
4.2. Where a consumer exercises the right in terms of Section 106(4)(a) to substitute a credit life insurance policy of the consumer’s choice at any time after the credit agreement is entered into, the credit provider must accept such substitution, provided that the new policy provides at least the benefits referred to in Regulation 3.
So, the NCR would like all credit providers insurance departments to stop playing games and swap the insurance at any time when the consumer asks (for example, if they enter debt review and then decide to change insurance providers).
We Asked DCCP What They Think This Means
We spoke to one of the leading suppliers of credit life products to consumers in debt review and this is what they told us:
DC Credit Protect appreciates the NCR’s issuance of guidelines pertaining to the application of the Credit Life Insurance Regulations of 2017. These guidelines reinforce the essential protections established by the initial regulations, primarily aimed at safeguarding consumers and confirming consumers’ rights to substitute their credit life insurance policies with a policy of their choice.
The emphasis on Treating the Customer Fairly (TCF) within the insurance industry is pivotal, and the NCR Guidelines underscore this commitment. Section 106(2) of the Act explicitly prohibits credit providers from imposing unreasonable insurance requirements on consumers, ensuring that costs are commensurate with actual risks and liabilities inherent in credit agreements.
‘These guidelines mark a significant advancement in industry standards’
These guidelines mark a significant advancement in industry standards, particularly in addressing concerns around the substitution of credit life insurance policies, as it confirms the fact that credit providers must accept the consumer’s substitution policy, provided that the new policy provides at least the benefits referred to in Regulation 3.
DC Credit Protect anticipates that these guidelines will encourage financial institutions to expedite substitutions promptly and efficiently, thereby enhancing overall consumer protection and operational integrity.
