Daily Insurance Industry News
Daily Insurance Industry News
Monday 24th of September 2018
February 25, 2011

FSA proposals on managing with-profits funds

by Gill Montia

Story link: FSA proposals on managing with-profits funds

The Financial Services Authority (FSA) has published proposals aimed at strengthening its existing rules on with-profits funds.

Last year, the regulator carried out a review of the way in which firms treat their with-profits policyholders and identified a number of concerns that have resulted in key proposals, as follows:

strengthen the requirement for boards and governing bodies to obtain independent advice on the management of funds by enhancing the role of the with-profits committee and the with-profits actuary;

require all firms to have a plan to distribute any excess surplus fairly to policyholders, particularly where a firm experiences a significant fall in the amount of new business it is writing;

strengthen the requirement for any new business backed by the with-profits fund to deliver value to all with-profits policyholders so that writing new business has no adverse effect on their interests;

improve the ways in which firms identify and manage conflicts of interest affecting with-profits policyholders;

emphasise how with-profits policyholders in mutually-owned funds should expect to be treated, specifically around distributions of excess surplus;

restrict the circumstances under which firms can impose a market value reduction; and

improve the reattributions process.

The FSA’s director of conduct policy, Sheila Nicoll, says: “The proposals focus on addressing practical issues where policyholders are not always getting the fair treatment that they deserve.”

She adds: “Policyholders expect to receive a fair return on their investments and that is what we want firms to be able to deliver for them.”

Further proposals aimed at improving communications with policyholders will be published by the end of this year.


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