Fees could be focus of FCA insurance review

Fees could be focus of FCA insurance review

An FCA review into historic insurance products could target exit and surrender fees, according to an industry insider.

PwC’s Matt Browne said the review, which was started in the second quarter of 2014, could be published imminently.

The conduct risk director in PwC’s insurance practice said: “Insurers are braced for impact and one of the main things weighing on their minds is whether the FCA and Treasury will target exit and surrender charges. The question of whether the FCA believes exit charges are excessive, locking customers into policies unfairly, still remains unanswered.

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“And while exit charge caps may seem an extreme response, price regulation of this type is not without precedent; just ask pay-day-lenders.”

A spokesman for the FCA said a date for the publication of the review has not been set. She declined to comment on the content of the review.

Adviser view

Kevin Hever, an adviser with Wolverhampton-based Cornerstone Financial, said: “I cannot see exit fees on life insurance being a massive issue because the majority of plans have been written on a term basis for years.

“For the majority of term plans the commission is not a great deal so the customer knows what they are getting.”