Life insurance providers face investigation into fee irregularities

- April 20, 2016

- in Life Insurance, News

A total of six UK-based insurance policy providers are having their dealings scrutinised by the Financial Conduct Authority, after claims that life insurance policyholders who’ve been in it for the long haul so to speak could have been misled. Or more specifically, not offered the same favourable deals as those Johnny come lately life insurance customers.

The six currently in the frame are some of the country’s biggest insurance names, and include the likes of Prudential, Old Mutual, Abbey Life, Scottish Widows, Countrywide Assurance and Police Mutual.

The specifics of the inquiries launched centre round suggestions that the aforementioned insurance providers might – as alleged – have been less than hospitable (from a financial perspective that is) to their more established policyholder who have been locked into pension plans and other savings policies for a considerable passage of time.

At least with regards to comparisons which have been made between the existing – and still maturing – life insurance policies and those offered to newbies.

A core aspect of this on-going assessment which is being carried out by the FCA includes the sampling of selected documentation which has been previously forwarded to long-standing policyholders, in response to them having made noises about either surrendering or transferring their present life insurance plans.

Seemingly it transpires that these six companies may (the emphasis still being on the ‘may’ for the record) have neglected in their duties of informing their customers as to what charges they were likely to have imposed on them should they action their proposed plans to revise the status quo one way or another at that particular juncture.

FCA Poring over Alleged Life Insurance Fee Discrepancies for Long-termers

The Financial Conduct Authority’s Chief Executive is Tracey McDermott, and in a statement released recently she concurred that (in McDermott’s words); “The practices at some firms appear to have been poor.”

If the outcome of the investigation proves beyond any reasonable doubt that some life insurance providers have failed a vital part of their sector remit, then the consequences could be immediate and far-reaching according to experts.

The imposing of fines, or alternatively ensuring that guilty parties pay compensation to policyholders adversely affected by their wanton ways are both looking distinct possibilities, potential ramifications which haven’t been lost on some of the insurance industry’s biggest players.

Take for example Conduct Risk Director at PwC, Matt Browne who told Reuters that; “The regulator isn’t pulling any punches, and looks set to take action across the life industry based on these findings,” going on to add; “The review is going to have a big impact on life assurers.”

Industry insiders have commented that the insurance sector is currently being weighed down under regulatory burdens across the spectrum, thanks to various recent changes, with major pensions reforms amongst them, with a charge cap one of the ideas being under discussion.

As it stands – and referring back to this breaking news surrounding perceived life insurance irregularities – three of the providers who have had the finger pointed in their directions of late (Old Mutual, Scottish Widows and Countrywide Assured) have confirmed that they intended to cooperate fully with the regulator’s investigative proceedings, whilst the Prudential and Police Mutual failed to comment when faced with enquiries, with Abbey Life refusing to respond.