Friday, 28 March 2014 11:05
FCA to probe 30 million old insurance policies
The Financial Conduct Authority will probe over 30million old insurance policies, according to reports today.
There are concerns that providers of pensions, endowments, investment bonds and life insurance policies sold in the UK between the 1970s and 2000, have been unfair to customers.
According to the BBC, the policies could be worth £150bn and the investigation will look into policies, which penalise savers who wanted to switch providers.
Insurance firms' share prices dropped in early trading – with Legal & General and Aviva among the biggest fallers on the FTSE 100 in London,
Details of the investigation are expected to be published on Monday.
Clive Adamson, the FCA's director of supervision, is quoted as saying: "As firms cut prices and create new products, there is a danger that customers with older contracts are forgotten. We want to ensure they get a fair deal.
"As part of the review we will collect information to establish whether we need to intervene on exit charges."
The FCA issued the following statement this afternoon:
"The FCA publishes its Business Plan on March 31st that provides a picture of the key priorities and areas of work for the year ahead.
"The work on fair treatment of long standing customers in life insurance is a supervisory piece of work. We enter into this work to gain a better understanding of how this area functions.
"We will be looking at how people in closed accounts are being treated.
"These accounts have been closed for many years in some cases, but there are still valid issues to be looked at around the question of the service that consumers receive in relation to those accounts. Are they getting the right information? Are they getting the right level of service? Are these investments still appropriate?
"We will be reviewing a representative sample of firms who we expect to look at whether they are treating their customers fairly.
"We are not planning to individually review 30million policies, nor do we intend to look at removing exit fees from those policies providing they were compliant at the time.
"This is not a review of the sales practices for these legacy customers and we are not looking at applying current standards retrospectively – for example on exit charges.
"This work will commence in the summer and we will be speaking to firms about how we can undertake that review.
"As a forward looking regulator, we want to examine areas that are of interest and relevance to consumers and to firms and assess whether there is an issue that requires any action. No conclusions have been reached as work has not started."