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Phoenix plays down FCA closed book review impact

Phoenix has attempted to play down the impact of the FCA’s review of closed book insurers as the firm announced cash generation of £235m in the first three months of 2014.

The company was rocked in March when The Daily Telegraph published a report suggesting the regulator was concerned legacy customers are locked into poor investments by steep exit fees, and insurers may be “exploiting” them by levying large fees to subsidise other parts of the business.

The news saw the share price of a number of providers, including Phoenix, plummet amid fears the FCA could retrospectively tackle exit fees on old policies.

The regulator was subsequently forced to issue a statement explaining the scope of the review in more detail and clarifying that it would not remove exit fees from policies providing they were compliant at the time.

Phoenix chief executive Clive Bannister says: “We remain fully focused on our policyholders with further actions taken during the first quarter aimed at the continued improvement of service and performance.

“We look forward to engaging with the FCA review on the fair treatment of long-standing customers in life insurance and believe our initiatives demonstrate best practice in this area.”

The insurer’s interim management statement, published this morning, reveals £235m of cash was generated in the first quarter of 2014. Phoenix says it is “on track” to meet its full year target of £500m – £550m of cash generation.

Phoenix also says it expects the £390m sale of Ignis Asset Management to Standard Life Investments to be completed by the end of the second quarter.

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