The Financial Conduct Authority (FCA) has started investigations into the disclosure of exit and paid-up charges of six life insurance firms to determine whether they are treating customers fairly.
These are Abbey Life, Countrywide, Old Mutual, Police Mutual, Prudential and Scottish Widows.
The regulator's decision to investigate these firms comes after a thematic review, which assesses the treatment of closed-book customers. These insurers formed part of a total of 11 firms included in the review. The study found a picture with most of the 11 firms demonstrating good practice in one or more areas and poor practice in others.
The six firms provided the FCA with documents where exit or paid-up charges applied. The majority of policies reviewed did not include such fees, but the regulator said they may have failed to inform policyholders of these charges and therefore was concerned some customers may not be aware of them.
Tracey McDermott, acting chief executive of the FCA said: "The practices at some firms appear to have been poor. We have particular concerns regarding how some firms communicated with their customers about exit and/or paid-up charges.
"We are now doing further work to understand the reasons for these practices, whether customers may have suffered detriment as a result and, if so, how widespread these issues are."
The investigations do not mean disciplinary action against the firms, or that a penalty would be imposed or redress would be payable, said the regulator.
McDermott expected all firms with closed-book customers, not just those sampled, to take into account the findings published today and ensure "they are treating their closed-book customers fairly".
In order to address the findings identified by the thematic review, the FCA is consulting on non-handbook guidance, which will provide firms with extra detail on the actions they should be taking in order to treat their closed-book customers fairly in the future.
