Following its thematic review of the fair treatment of long-standing customers of the sector, the FCA received documentation over charges from six of the 11 companies questioned. Of those six providers where charges applied on exit or early settlement, the majority of policies did not apply exit or paid-up charges.
However, where charges did apply, the FCA said all six provides may have failed to inform customers of the applicable charges at the time.
The FCA expressed concerns some customers may have been unaware of certain charges at the time they were incurred.
Fair treatment focus
The review looked at four main areas regarding closed-book customers: the provider’s strategy and governance framework; timing and effectiveness of communications about policy features; fund performance and policy values; and the ease with which customers can move exit products that are no longer suitable.
The regulator said it was not yet possible to draw any conclusions as to the reasons behind such behaviours but the initial findings had prompted further interrogation.
FCA acting chief executive Tracey McDermott, said given the long-term nature of closed-book products, it was vital customers were treated fairly.
She said: “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.”
A spokesperson for Old Mutual Wealth said: “Old Mutual Wealth notes the FCA’s announcement today regarding the initiation of an investigation into a number of firms including Old Mutual Wealth Life Assurance Limited.
“We participated fully in the industry-wide thematic project on ‘Fair treatment of long-standing customers of life insurers’ in 2014, which focused on our closed book of insurance products. We are working with the FCA and will cooperate fully with their further review.”
A Prudential spokesperson said: “Prudential will work closely with the FCA as it continues its review.”