FCA Thematic Review TR19/3: Review of fair treatment of with-profits customers
01 May 2019
Life insurance products are often complicated, may give rise to conflicts of interest between different customer and other stakeholder groups, and their long-term nature means that outcomes emerge over very long periods of time. Combined with often-low levels of customer engagement and understanding, there is a real risk that customers are not aware of poor emerging outcomes and then have little time to take corrective action.
These factors were at the heart of the Financial Conduct Authority’s (FCA’s) decision, as part of its ongoing Life Insurance supervision strategy, to embark upon a programme of work to identify and remedy the key risks of potential harm that life insurance firms may pose to their customers. The FCA’s programme of work is broad, and not for discussion here, but one specific area of investigation was a thematic review into the fair treatment of with-profits customers. The FCA’s findings were published in April 2019 in Thematic Review TR19/3.
In this brief summary we highlight the FCA’s key findings in TR19/3, together with some key areas that with-profits firms will need to consider to improve the management and governance of their with-profits funds.