Six firms face life insurance probe by FCA

The City watchdog has launched a probe into six insurance firms after its review of long-time life insurance customers raised concerns that some may not have been made aware of charges they faced.

Prudential, Old Mutual, Abbey Life, Scottish Widows, Countrywide and Police Mutual are to be investigated by the Financial Conduct Authority (FCA).

The FCA has been monitoring whether insurers have treated customers who are locked into pensions and other savings plans fairly, compared with new customers.

Tracey McDermott, the FCA's acting chief executive, said: "The practices at some firms appear to have been poor.

"We have particular concerns regarding how some firms communicated with their customers about exit and/or paid-up charges.

"We are now doing further work to understand the reasons for these practices, whether customers may have suffered detriment as a result and, if so, how widespread these issues are."

As part of its assessment, the FCA looked at how some firms had dealt with customers who wanted to surrender or transfer their policies.

The watchdog said that in the case of six of the 11 firms it reviewed, that where this resulted in charges being applied, the companies may have failed to inform customers of this at the time they were incurred.

It said it 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".

The regulator said the investigations into the six firms would not necessarily result in disciplinary action, that financial penalties would inevitably be imposed or that redress would be payable.

The FCA's review into the sector had an inauspicious start when a botched leak of its announcement to the Daily Telegraph in 2014 sparked chaos on the London stock market wiping billions from the value of UK-listed insurance companies.

It sparked fears of a draconian regulatory clampdown and was subsequently clarified by the FCA but not until more than six hours of trading had elapsed.

The episode prompted disquiet from Chancellor George Osborne and an independent inquiry by lawyers at Clifford Chance that was sharply critical of the FCA's approach. The watchdog's then-boss Martin Wheatley and three other executives gave up their annual bonuses.

(Sky News)