The FCA has revealed this morning that it has already begun investigations into the behaviour of Abbey Life, Countrywide, Old Mutual, Police Mutual, Prudential and Scottish Widows.
Abbey Life and Old Mutual will be probed on whether they “contravened regulatory requirements across a number of other areas” assessed in the thematic review.
The investigation will focus on disclosure of exit and paid-up charges after December 2008, following a Financial Services Authority review from 2004 to 2007 which instructed changes be made.
The move comes after a thematic review involving eleven firms assessed the treatment of closed-book customers. The FCA stressed it has come to no judgement yet regarding these six firms and whether they face penalties.
An FCA statement read: “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.
“Due to the concerns identified in respect of past conduct the FCA has concluded that further work is required to consider whether six of the eleven firms have failed to meet our standards and, if so, whether remedial and/or disciplinary action is necessary or appropriate in relation to these firms or others across the market.
“The FCA has concluded that the best way to explore these issues further is for that work to be undertaken by our enforcement division using our investigation powers under FSMA.
“These investigations have been commenced in order to enable the FCA to establish the reasons for the practices within firms; whether customers have suffered detriment as a result and how widespread any practices are within the six firms.
“No conclusion has been reached as to whether there have been any breaches of regulatory requirements. The commencement of investigations should therefore not be taken to indicate that they will necessarily result in disciplinary action against the firms involved nor does it indicate that a penalty will inevitably be imposed or that redress will be payable.”
The FCA may extend the probe more widely, it added.
Tracey McDermott, acting chief executive of the FCA said most of the eleven firms demonstrated good practice in one or more areas and poor practice in other areas.
She 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.”