FSA relaxes proposals on compensation payments for mis-selling
The Financial Services Authority (FSA) is reconsidering its proposals on the use of the surpluses in with-profits funds (also known as inherited estates) to compensate policyholders who are the victims of mis-selling.
Consumer groups have been petitioning for a change in the rules for years, arguing that shareholders should bear such costs.
Last year, 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.
Under the original proposals, a ban on compensation being paid from inherited estates was to be applied irrespective of the date of a mis-selling event.
However, the regulator is now proposing that the new rule should only apply to compensation and redress payments resulting from events that take place after the reforms have been introduced.
The FSA says it does not believe that the current proposals provide sufficient incentive for insurers to address failures in their systems and controls and as a result policyholders may not be treated fairly.
The new consultation period closes on 22nd May.
Category: Financial Services Authority News, Insurance News
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