FCA continues exit fee probe of five insurers

FCA continues exit fee probe of five insurers

The Financial Conduct Authority has dropped one of the investigations into a closed book life firm.

This morning (7 September) the regulator announced that it is no longer investigating Police Mutual but stated investigations into five other firms remain ongoing.

Earlier this year the FCA said it was looking into six firms, which, as well as Police Mutual, included Abbey Life, Countrywide, Old Mutual, Prudential and Scottish Widows, after finding a lack of transparency around the fees they charge customers.

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This was a result of a thematic review into the fair treatment of long-standing customers.

The FCA stated the investigation into Police Mutual had been closed with no further action.

It added that no decisions had been reached regarding the other five firms.

The FCA said: “No inferences should be drawn from the closure of the Police Mutual case concerning the continuing investigations.

“The FCA will update the market when decisions are made regarding the status of the remaining investigations.”

One of the purposes of the initial FCA review was to investigate levels of exit and paid-up charges being incurred by long-standing customers, and firms’ behaviour in applying those charges.

It found that even where customers are aware of these charges, their impact on the returns customers receive can be significant, and they may present barriers to customers shopping around.

Where charges were applied, the FCA found the providers may have failed to inform customers of their cost at the time they were incurred.

The regulator was 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.

Now it is probing the market more deeply to find out how widespread are the practices it has uncovered, and if they have led to customer detriment.