Most insurance policies bought by smaller UK companies do not cover disruption caused by the coronavirus pandemic, but those that do should make interim pay-outs quickly, a watchdog said on Wednesday, as insurers come under fire for being slow to act.

Britain’s Financial Conduct Authority (FCA) also told banks they must designate a senior manager accountable to the regulator for ensuring their lending to small businesses is fair.

Britain is in lockdown to try to contain the pandemic, with many companies shuttered and millions of people furloughed as the country heads for a deep recession.

Insurers including Lloyd’s of London’s Hiscox have faced criticism because they have said most businesses are not covered for the new coronavirus. Lawmakers have also called on insurers to be flexible over claims.

But the FCA said most insurance policies for small and medium sized companies (SMEs) only gave basic cover, with no obligation to pay out in relation to the pandemic.

“While this may be disappointing for the policyholder we see no reasonable grounds to intervene in such circumstances,” FCA interim chief executive Christopher Woolard said in a letter to heads of insurers.

“In contrast, there are policies where it is clear that the firm has an obligation to pay out on a policy. For these policies, it is important that claims are assessed and settled quickly.”

Interim payments could be made on valid claims to speed things up, Woolard said.

“If you disagree with doing so, we would like you to send to us the grounds for reaching that decision including how you believe it represents a fair outcome for customers,” Woolard said.

The Association of British Insurers said its members were committed to swift payment of valid claims and interim payments.

Hiscox’s shares have plunged more than 30% this week following reports that some businesses were considering legal action against it.

Claims assistance firm CEC said it had set up an action group for policyholders unhappy with how they are being treated by Hiscox.

“We strive to pay claims that are covered by the policies we issue fairly and quickly,” Hiscox said, adding general business interruption policies across the industry were not designed for the pandemic.

In a separate letter to heads of banks, Woolard said each lender must designate a senior manager to oversee small business lending.

While business loans are generally not directly regulated, the FCA can fine and suspend a senior manager who is not treating customers fairly.

Small companies have complained about shoddy treatment in the past by banks, some of which have admitted to mistakes.

“Our objective will be to ensure that there is not a repeat of the well documented historic issues in the treatment of SMEs,” Woolard said. (Additional reporting by Muvija M.)