Britain’s financial regulator has launched an investigation into six life insurers after concluding a review into the treatment of long-standing customers.
The Financial Conduct Authority is looking at Prudential, Scottish Widows, Old Mutual, Abbey Life, Countrywide and Police Mutual.
The regulator has been assessing whether customers locked into a pension and other savings plans have been treated fairly compared with new customers. It is worried that exit charges for people who dip into pensions or savings early have not been communicated properly
“The practices at some firms appear to have been poor,” said Tracey McDermott, the acting chief executive of the FCA.
The FCA said today that six of the eleven firms which took part in the review provided documents where exit or paid-up charges applied. The majority of policies reviewed did not include charges. However, where charges were applied, it found that the six firms may have failed to inform customers of these charges at the time they were incurred.
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“The FCA is concerned that as a result, 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,” the regulator said.
The investigation would not necessarily result in disciplinary action, financial penalties or redress for customers, the regulator said.
The review into life insurers has not been without controvery. Two years ago, the FCA bungled a briefing about its plans. It led to billions of pounds being wiped off the value of the shares of the UK’s biggest insurers. Martin Wheatley, who headed of the regulator at the time, admitted it was “not our finest hour”.
