Savers Free To Withdraw From Poor Pension And Insurance Investments
8th May, 2014
30 million insurance policies, pensions, and investment bonds that were sold pre millennium are to be at the centre of a city watchdog enquiry following concerns that loyal policyholders are being exploited. Long-term investors will be free to opt out of their existing insurance policy and find a better deal.
Regulators believe that savers who purchased financial products between 1970 and 1999 are getting poor deals in comparison to today's investors. Spurred on by large commissions, doorstep salesman previously pushed investments that are no longer serving the policyholders' needs. Savers will now have the freedom to look elsewhere and compare life insurance quotes and endowment policies without the worry of a hefty cancellation fee if they withdraw from their existing plan.
The Financial Conduct Authority (FCA) is concerned that long-time investors are receiving a sub-standard service and are low priority to the insurers. The FCA's director of supervision, Clive Adamson, said of the enquiry: “As firms cut prices and create new products, there is a danger that customers with older contracts are forgotten. We want to ensure they get a fair deal. As part of the review we will collect information to establish whether we need to intervene on exit charges.”
The FCA annual business plan will be published on Monday and will include details of the inquiry. It is expected that regulators will be calling for insurers to perform 'suitability checks' on all existing policyholders as well as eradicating so-called 'lock-in' fees.