City watchdog to probe insurers over treatment of loyal customers

Financial Conduct Authority
Financial Conduct Authority
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The Financial Conduct Authority has launched a probe into six insurance firms including Prudential and Old Mutual as part of a review into the treatment of long-time life insurance customers.

The other firms identified were Abbey Life, Scottish Widows, Countrywide and Police Mutual.

The financial watchdog has been monitoring whether insurers have treated customers locked into pension and other savings plans fairly compared with new customers.

As part of this assessment, the FCA sampled a number of documents sent to customers who had requested either to surrender or transfer their policies.

Six of the 11 firms who took part in the thematic review provided documents where exit charges applied. In those six firms, the majority of policies reviewed did not include charges but where fees were applicable, the FCA said the six firms may have failed to inform customers of these charges when the policy was exited or converted.

“The practices at some firms appear to have been poor,” acting FCA Chief Executive Tracey McDermott said in a statement.

The regulator said the investigations into the six firms would not necessarily result in disciplinary action, that financial penalties will inevitably be imposed or that redress will be payable.