The Financial Services Authority (FSA) has issued a warning to Insurance firms that they are closely watching those that are flouting its code on with-profits investments. So far two firms will face enforcement action. The Financial Services Consumer Panel said: “We are seriously concerned that, although the FSA introduced the current regime for with-profits in 2005, this report shows policy holders are still not being treated fairly by the FSA’s own measures.”
The FSA’s news that two firms would receive enforcement action has propted consumer groups to demand the firms be named so that policy holders can be made aware.
The FSA conducted in-depth visits to 17 firms over the span of six months from September 2009 through February 2010. The visits found significant failures in providing quality consumer literature and ineffective governance of with-profit funds. The FSA has issued a statement that the firms have been told to address the need of improving their operations.
Ken Hogg, FSA insurance sector director, said: “Firms should make sure that their communications with policy holders are clear and manage expectations about the likely performance of their policy. They should also ensure that their with-profits committees are providing an independent challenge to their management.”