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FCA to investigate 30 million financial policies

28/03/2014

The Financial Conduct Authority (FCA) is set to investigate around 30 million financial policies, all of which penalise customers for switching providers.

The investigation will proceed on the basis that there are concerns over customers being subjected to “unfair” conditions.

Pensions, endowments, investment bonds and life insurance policies sold between the 1970s and 2000 will be among the policies which will be investigated.

Some savers could lose up to half of their savings if they move to another company. The FCA added to this by saying that “zombie” funds, which are closed to new clients could be being abused by insurers in order to pay overheads from other parts of their business.

Clive Adamson, director of supervision at the FCA claimed “there is a danger of customers with older contracts being forgotten.”

He went on to say “We want to find out how closed-book products are being serviced by insurance companies, as we are concerned insurers are allocating an unfair amount of overheads to historic funds.

Independent pension expert, John Ralfe commented on the scale of the investigation. He stated that there appears to be “quite a chunky piece of work for the FCA to be looking at” as there could be up to £150bn at stake.

He continued to add that the FCA appears to be suggesting that rather than fining companies, an alternative solution would be to allow individuals to exit these policies without penalty.

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