Regulator to investigate six life insurance firms
The Financial Conduct Authority (FCA) is to look into the treatment of customers with ‘zombie’ life policies at six firms, over a failure to inform clients of certain charges, including exit fees.
The firms being investigated for poor practice are Abbey Life, Countrywide, Old Mutual, Police Mutual, Prudential and Scottish Widows. The policies in question are ‘closed book’, meaning that they are no longer open to new customers, but still have long-standing policies in place.
In a recent report the FCA’s found that where exit fees applied, some firms may have failed to inform customers.
The regulator will now consider whether disciplinary action should be taken against these firms or others across the market.
Tracey McDermott, acting chief executive of the FCA, said the practices at some firms appeared to have been “poor”.
“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 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.”