Fines imposed by the FSA on life offices will have to be paid by shareholders rather than out of funds owned by policyholders, the regulator has confirmed.
The rule change made by the FSA Board last week comes into effect as of November 1.
As reported in Money Marketing in the summer, the idea was proposed in Consultation Paper 137, Miscellaneous Amendments to the Handbook (No. 2).
FSA chairman Howard Davies says: “In the past, firms have paid fines for rule breaches out of long term funds. We proposed this rule change as we believe that, where possible, fines imposed on a firm should be paid by its owners and shareholders rather than out of funds from which policyholder benefits are paid.”