Two with-profits providers have been referred to the FSA’s enforcement division after a review of 17 companies which identified widespread weaknesses.
Last year, the FSA scrutinised how senior management at the with-profits providers had implemented the regulatory regime.
The firms represent around 80 per cent of the with-profits industry. The regulator found the majority did not demonstrate their practices were consistent with well run WP businesses in one or more areas. It identified ineffective governance and “significant weaknesses” in the quality of consumer communications as two main areas of concern.
The FSA says: “Firms have been directed to make immediate changes to their practices across the operation of with-profits funds to better protect policyholders’ interests, in particular to improve governance arrangements and post-sale policyholder communication. We will be monitoring firms’ responses closely and will consider disciplinary actions.”