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FSA to probe fair play on with-profits

The FSA&#39s with-profits review is set to turn the spotlight on whether life offices treat policyholders fairly and examine unfair contract terms.

Plans for the review, ann-ounced in January, are outlined in the regulator&#39s scoping paper published this week.

The review will investigate on what basis with-profits off-ices aim to satisfy the interests of customers and how they maintain fair treatment.

The FSA says it intends to publish a consultation paper on the use of fair contract terms with a view to creating more balanced contractual relationships between product providers and consumers.

The regulator has also given further details of how it will examine the transparency of with-profits policies, with the paper highlighting how with-profits products which offer differing features act as a barrier to consumer understanding.

The FSA also intends to publish a discussion paper for consultation by the end of the year to consider how information featured in product and marketing literature and other materials can be made more intelligible through the use of plain English.

Clerical Medical pensions strategy manager Nigel Stam-mers says: “I am pleased that the language of the paper suggests the purpose of the review is not to do away with with-profits but to improve it.

“However, I am concerned there is no mention of the word &#39guarantee&#39 in the reasons why people are attracted to with-profits. It seems to be steering with-profits to the stakeholder ring-fenced version, which typically does not offer a guarantee.”

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