FSA takes backward step in treating with profits policyholders fairly

19 May 2009

The Consumer Panel has today responded robustly to the latest proposals from the FSA to allow compensation payments for mis-selling to be taken out of with profits policyholder funds.  Adam Phillips, Acting Chairman of the FSCP said today:

“The FSA’s latest consultation proposals in CP09/9 represent a backward step for policyholders.  Last year, the FSA proposed (in CP08/11) to change the rules so that no mis-selling costs could be taken out of with-profit funds, regardless of when the mis-selling occurred. We supported this, believing that it is only fair that the business itself should bear costs relating to mismanagement.

“Now the FSA is proposing to let shareholders off the hook for corporate mismanagement in the past. The new proposals mean that policyholders will still have to continue to pay costs for past mis-selling and only mis-selling which occurs in future will become the responsibility of shareholders.  The Panel understands the challenges presented to the industry by the original proposals and it is important for the FSA to look at all the options to overcome them.  But having uncovered unfairness, the FSA should resolve it.”   

Notes to editors

  1. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.

  2. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. What we're doing for consumers explains more about the work the Panel is doing.

  3. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

  4. There are currently eleven members of the Panel as listed below (for further information on individual members, see Who is on the Panel)

    5. Adam Phillips (Acting Chairman)
    Kay Blair
    Michael Chapman
    Stephen Crampton
    Caroline Gardner
    Jenny Hamilton

    Tony Hetherington
    Nick Lord
    David Metz
    Lindsey Rogerson
    Carol Stewart

 

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FSA publication

Consultation paper CP09/9:With-profit funds - compensation and redress: Further consultation, feedback on CP08/11 and draft Handbook text

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