You may have read in the news over the past couple of days that The Financial Conduct Authority (FCA) recently published a report into the fair treatment of long-standing customers in the life insurance sector. At the same time, The FCA announced that it wished to investigate six firms, including Police Mutual, to consider whether any of its standards had been not been met and, if so, what the implications might be for these firms or indeed others across the market.
As we have been expressly named in this announcement, I am keen to share, as far as I am able to at this stage, the background to this investigation, what it means and how seriously we are responding to it given the importance of putting our member's interests first.
The FCA has an essential role in the financial services sector to protect customers from any harm that can be caused by bad conduct. We fully support FCA in this objective.
FCA has been concerned, for some time, that customers of products that are not actively marketed by firms across the sector may not get a fair deal. This can be for a range of reasons but typically as they may not be given the same attention by some firms as customers with current products. I can understand these concerns and we fully support FCA's initiative.
In 2014, FCA explored these concerns further by beginning an industry wide review based on interviews and documentation from eleven companies. We were chosen and were happy to participate in this review which focused on what are called "closed life insurance products" (which are those which are no longer marketed) and received some helpful feedback at the time of this first review.
The new investigation wants to explore the topic in more depth and more formally. In particular, it is focusing on whether we gave all the information necessary, for members who were considering cashing in or stopping paying to any of our "closed" products, to take fully informed decisions. Our "closed" products are Low Cost Endowments, Minimum Low Cost Endowments, Capital Growth Bonds and Top Up Pension Plans. If you are a member with one of these products or had one in the past, you do not need to do anything at this stage.
In our affinity we recognise that our members will often have a range of products with us from ones taken out many years ago to those purchased very recently. As a result, we do not try and treat members with different products differently. As a not for profit mutual, we also have a good track record in taking the initiative in reducing charges and prices for many many thousands of existing members and customers.
In part, this means that our "closed" products are a very small part of our business - in fact, less than 1% of our overall policy numbers. While The FCA has acknowledged that it has not reached any conclusions as to whether there have been any breaches of regulatory requirements or indeed whether any one has been adversely affected, we take any suggestion or inference extremely seriously and are conducting our own full independent investigation as well as cooperating openly and fully with FCA.
At Police Mutual, we set ourselves high standards. If we have fallen short in any way, I am certain that this would have been unintentional, but that would not be an excuse. Most importantly, I promise that none of our members should suffer if they have lost out as a result.