The UK’s city watchdog, the Financial Conduct Authority (FCA), has started to investigate Old Mutual, Scottish Widows, Police Mutual, Abbey Life, Countrywide and Prudential as it monitors whether or not insurers are treating those customers that are locked within savings plans and pensions fairly when compared to new customers.
Commenting on the issue, Tracey McDermott, the acting chief executive at the FCA, commented that the practices at some firms look to have been poor.
“We have particular concerns regarding how some firms communicated with their customers about exit and/or paid-up charges,” she said.
“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.”
During its assessment, the FCA examined the processes companies used to deal with customers that wanted to transfer or surrender policies. For six of the 11 firms reviewed, in cases that resulted in charges, the FCA states that companies may not have informed customers of charges as they were incurred.
Its investigations however, will not necessarily lead to disciplinary action. However, the regulator did state that it was “concerned that… some customers may potentially have been unaware that they would have to pay such a charge or that they have paid or are paying such a charge”.
On Monday, we’ll speak to Advocis to assess how similar regulation would be applied in Canada.
A probe has been launched into six life insurance firms after concerns were raised by customers over the charges they were given.