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FSA slammed over treatment of with profits policyholders
The Financial Services Authority (FSA) has come under attack for allowing compensation payments for mis-selling to be taken out of with profits policyholder funds.
Responding to the regulator's proposals in consultation paper CP09/9, the Financial Services Consumer Panel (FSCP) has branded the decision as a step backward in treating with profits policyholders fairly.
Adam Phillips, acting chairman of the FSCP, said today (19 May): "Last year, the FSA proposed (in CP08/11) to change the rules so that no mis-selling costs could be taken out of with-profit funds, regardless of when the mis-selling occurred.
"We supported this, believing that it is only fair that the business itself should bear costs relating to mismanagement.
"Now the FSA is proposing to let shareholders off the hook for corporate mismanagement in the past.
"The new proposals mean that policyholders will still have to continue to pay costs for past mis-selling and only mis-selling which occurs in future will become the responsibility of shareholders."
Phillips added: "The panel understands the challenges presented to the industry by the original proposals and it is important for the FSA to look at all the options to overcome them. But having uncovered unfairness, the FSA should resolve it."