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Insurers remain under scrutiny over 'closed' policies

Insurers remain under scrutiny over 'closed' policies

by Jack Gilbert Sep 07, 2017 at 12:26

The financial watchdog has said it is continuing to investigate insurers' treatment of millions in customers in legacy policies, despite dropping its probe into Police Mutual, an insurance company for serving and retired police officers.

The Financial Conduct Authority (FCA) announced last year that it would investigate a number of insurers' 'closed book' policies that are no longer marketed to new customers.

These legacy policies have been an area of concern for many years because of the lack of transparency over what happens to policyholders’ money and the charges they may pay.

In particular, the FCA is concerned at the prevalence of high exit charges and the ability of insurance companies to levy higher fees when policies go ‘paid up’ and no longer receive regular premiums.

When the investigation was launched the launch the FCA said ‘the six firms may have failed to inform customers of these charges at the time they were incurred.’

The regulator has now said it has ended its investigation into Police Mutual ‘with no further action taken’.

But it said it would continue to investigate the other five insurers referred to its enforcement division last year.

‘The investigations into Scottish Widows, Prudential, Countrywide Assured, Old Mutual and Abbey Life are continuing and no decisions regarding these firms have been reached by the FCA at this stage. No inferences should be drawn from the closure of the Police Mutual case concerning the continuing investigations,’ the regulator said in a statement.

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

Last December the regulator released a consultation including a number of remedies to improve how life companies treat long-standing customers.

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