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Tuesday, December 06, 2005

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ACCOUNTANCY TODAY
 
FSA tells assurers to apply common standard
Shadene Goff and Andrea Felsted from London
12/6/2005
 

          The Financial Services Authority (FSA) of the United Kingdom warned last week that life assurers and other financial groups would be expected to apply the same standards to policyholders with with-profits funds that were about to be closed as policyholders with funds that have already closed. Last year the City regulator drew up rules aimed at protecting policyholders of closed with-profits funds. These demanded that life assurers be more open as to the way funds were run and the payouts that could be expected.
Lately the FSA said these rules would apply to with-profits funds that were about to be closed. Norwich Union, Royal London and Skandia were all named as having these.
The regulator said it would be looking at the information provided when the fund closed, the communication between policy holder and provider, the distribution of any surplus funds and-the costs involved in outsourcing the fund to a third party.
"While some funds are technically open, they, are nevertheless 'nearing' closure," the FSA said. "As such they may have issues in common with those that are completely closed. Where we think this is the case, we will typically refocus our supervisory approach to concentrate on these issues, helping ensure that policyholders are appropriately protected."
The FSA also emphasised the difficulty of providing generic advice to policyholders in closed with-profits funds. "There is a perception that all closed funds are performing poorly but the picture is more mixed. We would urge policyholders to look at other factors such as what the policy would be worth when it matures and any policy guarantees, as well as whether the fund is open or closed," it said. Meanwhile Royal London said it was not interested in buying Equitable Life's £10bn with-profit fund that has already closed. "We want to make it clear we did not approach Equitable Life and that we have decided not to take the initial consideration any further," it said.
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FSA tells assurers to apply common standard
 

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