FSA consults further on change to with-profits rules
23rd February 2009The Financial Services Authority (FSA) has today published a further consultation paper (CP) relating to compensation and redress payments arising from operational failures including mis-selling that life insurance companies may currently charge to their with-profits funds. These proposals relate specifically to proprietary firms rather than mutuals.
Under current rules, a firm may pay compensation and redress from assets attributable to shareholders or from the inherited estate of its with-profits fund (if any). In a consultation paper issued last year (CP08/11) the FSA proposed that the shareholders alone should meet the cost of future compensation and redress payments as the current rules may not lead to the fair treatment of policyholders. The FSA is now proposing that the amended rules should only apply to compensation and redress payments resulting from events that take place after the rule comes into force. This will provisionally be the end of July.
The consultation will close on 22 May 2009. The FSA will then publish a policy statement and will finalise draft rules.
