View more on these topics

Life office profit push could hit TCF

The FSA says life offices are under pressure to drive up profits and run the risk of creating consumer detriment by pursuing aggressive growth strategies.

The FSA’s retail conduct risk outlook, published this week, says the continued net outflow of assets from life companies suggests firms will need to make significant changes to their business model over the medium to long term.

It says: “Some life insurers are looking to adopt aggressive growth strategies to increase profits and earnings. There is increased potential for this to come at the expense of treating customers fairly and creating consumer detriment through misselling, poor product design or low service standards.”

The FSA is also concerned some insurers have poor governance and control practices around their unit-linked funds, which could lead to inadequate disclosure to consumers and may increase the risk that the insurer fails to manage the fund within the stated risk profile.

It is also worried firms may fail to make the appropriate system changes needed to comply with the European Court of Justice ruling which bans gender-based pricing from December 21.

The FSA says: “The unprecedented extent of concurrent changes affecting life insurers continues to put significant pressure on their business models.

“Regulatory initiatives will significantly influence the life insurance sector. The combination of the RDR, Solvency II and the introduction of Nest brings opportunities to some firms but also represents a significant challenge for the sector.”

Atkinson Bolton Consulting director Simon Gibson says: “There are arguably too many old-style businesses, including life companies. I take no joy in saying this but it is inevitable that some will go to the wall.”


Businesses criticise “high and complex” Nest charges

The Confederation of British Industry says Nest’s “high and complex” charging regime is preventing the Government-backed pension scheme competing with private sector rivals. A report from the work and pensions select committee, published today, urges the Government to remove Nest’s restrictions “as a matter of urgency” because they create a barrier to employers choosing the […]

Pru’s UK profits dip 9% as annuity sales fall

Prudential’s UK arm saw a 9 per cent fall in operating profits on an EEV basis, from £982m to £893m, for 2011 as annuity sales decreased.   On an IFRS basis operating profits were up 1 per cent, from £719m to £723m. Sales of individual annuities fell 13 per cent to £179m APE and sales […]


Treasury, FSA and MAS pass the buck on Hobman pay row

The Government, the FSA and the Money Advice Service have each refused to take responsibility for MAS chief executive Tony Hobman’s £350,000 salary package. Last week, MPs from the business, innovation and skills committee called on the Government to urgently raise the issue of Hobman’s salary with the FSA. Hobman gets a base salary of […]


Friends appoints chief risk officer

Friends Life has appointed Rosie Harris as chief risk officer. Harris joins Friends from Lloyds Banking Group where she was general insurance managing director. Friends says Harris will be responsible for managing the strategic and operational risk management and governance framework and will report to Friends chief executive Andy Briggs. She is expected to join […]

Craig Inches – thoughts on how to preserve capital and generate income in an inflationary environment

In this short video, Craig Inches, head of short rates and cash at Royal London Asset Management, offers his thoughts on how to preserve capital and generate income in an inflationary environment. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm