FCA launches investigation into six life insurers

The FCA has commenced an investigation into practices at Abbey Life, Countrywide, Old Mutual, Police Mutual, Prudential and Scottish Widows.

The regulator says it is 'concerned' that some customers may potentially have been unaware that they would have to pay such a charge or that they have paid or are paying such a charge.

The FCA has concluded that further work is required to consider whether six of the eleven firms have failed to meet standards and, if so, whether remedial and/or disciplinary action is necessary.

It will also convene an industry-wide discussion with a view to industry reaching a voluntary solution to capping or removing exit and/or paid-up charges on certain investments.

This work will be in addition to the new duty to make rules, proposed by HM Treasury and currently being considered by parliament, to cap exit charges on customers cashing in their pension savings.

Tracey McDermott, acting Chief Executive of the FCA said:

“Given the long-term nature of closed-book products, it is vital that customers are treated fairly and given the right information on an ongoing basis in order to help them make important financial decisions. We expect all firms with closed-book customers to take into account the findings we have published today and ensure they are treating their closed-book customers fairly.”

“The practices at some firms appear to have been poor. We have particular concerns regarding how some firms communicated with their customers about exit and/or paid-up charges. We are now doing further work to understand the reasons for these practices, whether customers may have suffered detriment as a result and, if so, how widespread these issues are.”