Closed-book customers should be treated fairly
Closed-book customers are more likely to be fairly treated with the publication of new FCA guidance.
Do you have any pensions, investments or insurance policies with ‘closed-book’ life assurance providers?
When you’re a customer of a business which is no longer taking on new business, you can sometimes feel like you get a bit less attention than you deserve.
The Financial Conduct Authority (FCA) has been reviewing this issue, and has now published guidance for firms on how to treat closed-book customers fairly.
The guidance is part of a programme of work the FCA is carrying out to address the risk of poor practice in the treatment of existing customers. This is something they identified in their business plan.
Within the FCA Mission document it explains that some groups of consumers are likely to be vulnerable because of circumstances, such as being trapped unwillingly in long-term contracts.
To help address this issue, the FCA carried out a thematic review into the fair treatment of long-standing customers in the life insurance sector.
This thematic review identified a mix of good and poor practice.
In publishing their new guidance, the FCA has covered four high-level customer outcomes:
– the firm’s strategy and governance framework results in the fair treatment of closed-book customers;
– the firm’s closed-book customers receive clear and timely communications about policy features at regular intervals and at key points in the product lifecycle to enable them to make informed decisions;
– the firm gives adequate consideration to, and takes proper account of, fund performance and policy values in a way that ensures it treats its closed-book customers fairly and proportionately;
– the firm’s closed-book customers are able to move from products that are no longer meeting their needs in a fair and reasonable manner.
Megan Butler, Executive Director Supervision – Investment, Wholesale and Specialists Division at the FCA said:
“Our previous work in this area uncovered poor practices at some firms across the sector. We are not introducing new rules, but this guidance will help firms know what we expect of them to ensure their customers are treated fairly going forwards.”
This new guidance from the FCA covers a variety of financial products including personal pensions, SIPPs, endowments and investment bonds.
The FCA is also expecting financial services providers to consider the guidance for all products, including any actively marketing products, in which long-term customers are invested.
Providers have three months to review their business practices in light of the new guidance and make changes as necessary.
This new guidance should result in fairer treatment of customers in closed-book insurance and investment products.
If you find yourself in a closed-book product, or so-called ‘zombie fund’, then rather than waiting for the provider to improve their customer service, you should seek professional independent financial advice and consider moving to a modern product with a better customer focus.[easy-tweet tweet=”Will new FCA guidance improve the treatment of closed-book customers?” usehashtags=”no” template=”light”]