Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps small business owners should take whose insurers are deducting the £10,000 Coronavirus Small Business Grant from insurance payouts indicating that businesses have already been compensated by the Government.

The Government is in continual dialogue with the insurance sector regarding their contribution to the handling of this unprecedented situation. The Government is also working closely with the Financial Conduct Authority (FCA) to ensure that the rules are being upheld during this crisis.

The FCA rules require insurers to handle claims fairly and promptly; provide reasonable guidance to help a policyholder make a claim; not reject a claim unreasonably; and settle claims promptly once settlement terms are agreed. In addition, the FCA has said that, in light of COVID-19, insurers must consider very carefully the needs of their customers and show flexibility in their treatment of them.

Customers who feel that they have not been treated fairly should first make a formal complaint to their insurer. If they then feel that their complaint has not been dealt with satisfactorily, they are able to refer the matter to the Financial Ombudsman Service (FOS), an independent body set up to provide arbitration in such cases. The FOS can help micro-enterprises with annual turnover sheets that do not exceed €2 million, and small businesses with turnover that does not exceed £6.5 million. The decision of the FOS is binding on insurers up to £350,000.

If customers would like to make a general complaint about the practice of deducting small business grants from the value of insurance settlements, the FCA would be happy to hear from them through their consumer support service.

While the FCA can’t resolve individual disputes and will not normally be able to discuss their investigations or findings with the person making the complaint, they can take any information provided into account as a part of their wider monitoring of practices in the sector.