FCA Says Insurance Companies Treated Long-Term Customers Poorlyby
Authority reviewed treatment of customers in life insurance
FCA was criticized in 2014 after review leaked to newspaper
Life insurance companies have in some cases treated long-term customers poorly, the Financial Conduct Authority said in the culmination of a review that had led to widespread criticism of the regulator.
“The practices at some firms appear to have been poor,” Tracey McDermott, the FCA’s acting chief executive, said in a statement Thursday. “We have particular concerns regarding how some firms communicated with their customers about exit and/or paid-up charges.”
The probe has been a delicate subject for the FCA since a regulator briefed a newspaper about the life-insurance review in 2014. Insurers lost as much as $4.2 billion as shares plunged after the article and the FCA waited over six hours after trading began to clarify the scope of the study. The leak and losses led to a Parliamentary probe, with lawmakers roundly criticizing the regulator.
The FCA said its review, which included 11 companies of different sizes, isn’t conclusive on the reasons for some of the firms’ practices, how widespread they are and whether customers suffered detriment as a result. The authority has decided to continue its probe to “understand the reasons for these practices.”
A U.K. insurance group said that the report dealt with products that are rarely sold today.
“The long term savings industry is now modernizing and focused on serving its customers, through auto-enrollment pension products or helping them make the most of the new pension freedoms," Hugh Savill, director of regulation at the Association of British Insurers, said in a statement.