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Phoenix wades in on FCA closed book row

Phoenix Group Holdings chief executive Clive Bannister has waded in on the row over the FCA’s handling of its review into closed book policies, describing the incident as a “self-inflicted wound”.

In an interview with the Daily Telegraph, Bannister was critical over the briefing to the newspaper which prompted insurers’ shares to plummet last month over fears of a review into closed book policies which could see exit charges scrapped.

Closed book provider Phoenix has about six million policies, and saw its shares fall 23 per cent on the day of the report, ahead of the FCA issuing a clarification about the scope of the review.

Bannister has not joined calls for FCA chief executive Martin Wheatley to resign over the issue.

He told the newspaper: “This shouldn’t be about individuals. It is much more about how a regulator works with an industry and the rules that apply to us should apply to them.

“This is not an adversarial competition. That is not the way to operate an industry because we want to attract capital to protect people’s retirement, and capital is attracted where there is stability and predictability of returns. Anything that diminishes that does not help a regulator and does not help us as operators. I think it was a bit of a self-inflicted wound.”

Last week the FCA appointed Clifford Chance senior commercial litigation partner Simon Davis to carry out an independent inquiry into the way the regulator handled the announcement.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. “….we want to attract capital to protect people’s retirement…”

    OMG! Is this the apogee of hypocrisy or does this fellow really believe this guff? If this is this is protecting pensions then heaven help us all. We should take the money and stuff it under the mattress.

    We have all come across indifferent fund performance and eye watering transfer penalties. Even Standard Life imposed a 12% early surrender charge on one of their pensions on a case I reviewed last November.

    And Mr Bannister can tell the Regulator with a straight face that he is protecting pensions, when his firm often makes 12% look cheap.

  2. We dread getting a client with a Phoenix policy as you can guarantee that they will not send you all that you ask for, what they do send will often be wrong or incomplete. It will take several further attempts to get them to send you the correct information.

    I think Monty Python used the wrong bird for their famous sketch!

  3. So just what IS the scope of the FCA’s review now going to be? Setting aside the premature leaking to the press that a review was in the pipeline, is any aspect of it to be watered down or abandoned? The key issues (with these old policies) seem to be:-

    1. access to a limited range of in-house funds,

    2. poor performance of those funds due to reluctance to invest in good fund managers,

    3. Difficulties in obtaining meaningful data on the performance of those funds,

    4. heavy charges and

    5. punitive early exit charges.

    All except No. 4 of the above are (or at least should be) eminently fixable and (to me) don’t seem to be unreasonable areas for the regulator to target.

    So what if the share prices of the providers in question took a tumble? The reason they’ve been so high is because the providers have for far too long been getting away with making unreasonably large profits out of their policyholders and obstructing their exit with excessive penalties.

    Apart from the fact that the regulator should perhaps have anticipated and handled better the impact on share prices that its announcement would inevitably have, I really don’t see what all the hue and cry is about.

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