Financial Services: Insolvency

Department for Business, Energy and Industrial Strategy written question – answered on 17th May 2022.

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Photo of Owen Thompson Owen Thompson SNP Chief Whip

To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will introduce new protections for policy holders with companies in administration, to ensure that they are reimbursed the full amount of their policy is worth if that policy becomes invalidated through no fault of their own.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

Consumers who hold a policy with an insolvent company are usually classed as unsecured creditors. Other unsecured creditors might include employees and trade suppliers. Changing the order of ranking for policy holders would have a detrimental effect on these other unsecured creditors as well as having wider implications for the economy, including on the cost of borrowing for firms.

The Government continually reviews the insolvency framework and will make changes where it is necessary to do so. Insurance and other related policies, however, are often protected by other methods, including regulatory regimes which provide statutory protections for consumers.

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