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With-profits challenge faces firms

The supervisory focus on with-profits advice will continue for the FSAIt says it will challenge firms to ensure with-profits clients are treated fairly.

The regulator’s business plan says: “We will take a close interest in ensuring that there is appropriate governance in place, pursue the closed funds’ agenda outlined in last year’s business plan, and review firms’ progress in improving the quality of their post-sale communications.”

It will also re-consult on the use of inherited estates in with-profits funds, specifically the rule that allows firms to charge misselling compensation costs to the inherited estate.

A post-implementation review of the conduct of business sourcebook is also on the agenda, which will assess the success of the new regime against its intended outcomes.

In the second quarter of this year, the regulator will publish its findings on responsible lending by mortgage lenders, including examples of good and poor practice. A review of the mortgage conduct of business regime will be carried out, including exploring the scope for moving towards high-level rules and the potential for simplification.

The plan says: “In the first half of 2008 we will review the arrears’ management practices of firms that provide finance to customers buying a home and securing this lending with a mortgage on the property, monitoring more closely whether lenders are treating customers fairly when they go into arrears.”

The FSA will also carry out more work on consumer responsibility and caveat emptor, with a discussion paper due later in the year. It will set out the FSA’s thinking on any legal issues and actions consumers should take to protect their interests.


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