The financial regulator has written to life insurance companies requesting information about with-profits policies as part of a review into the sector.
The Financial Conduct Authority (FCA) stated its review into the fair treatment of with-profits customers, which was included in the last business plan, “will allow us to understand further the range of practices that are now being adopted by firms”.
With profits policies, which are no longer widely sold, are investment products sold by life insurance companies.
Many offer guarantees of returns, which will also fall under the FCA's microscope, a long with the practice of smoothing, which aims to even out the ups and downs of markets.
However, the regulator added the focus of the investigation will be decided after information comes back from with-profits companies.
The last review into with-profits policies was in 2010 by the then regulator the Financial Services Authority (FSA). This review uncovered concerns over whether policyholders’ interests were being properly protected and whether customers were getting the best information about their policies.
The full FCA review will start in the final quarter of 2017 or early 2018.
“We do not have pre-determined views about whether any particular practices are unfair or are leading to unfair outcomes and have not drawn any conclusions about whether with-profits customers are being unfairly treated,” the FCA stated.
