Sipps firms included in FCA’s tougher closed-book stance

The FCA has told providers - including Sipps companies - who are operating ‘closed books’ of business to follow new guidance and review their practices within three months of today. The watchdog today published its finalised guidance providing firms with detailed information on the actions they should be taking to treat their closed-book customers fairly.The products covered by the guidance are personal pensions (including SIPPS and Retirement Annuity Contracts), endowments, investment bonds and whole-of-life policies. However, the FCA says its expects firms to consider the guidance across all products, including actively marketed products, in which long-standing customers are invested.Firms are expected to review their business practices within three months of today and, if necessary, make changes to them in light of the guidance.The FCA says it wants to ensure that closed-book customers, who have life insurance products that are closed to new business, are treated fairly and do not receive less attention than customers who have recently taken out a new product.Megan Butler, an executive director supervision at the FCA said: “Our previous work in this area uncovered poor practices at some firms across the sector. We are not introducing new rules, but this guidance will help firms know what we expect of them to ensure their customers are treated fairly.”This guidance forms part of a programme aimed at addressing the risk of poor practice in the treatment of existing customers, says the FCA.The FCA states in its Mission document that some groups of consumers are likely to be “vulnerable” because, for example, they are trapped unwillingly in long-term contracts.The guidance follows the findings of the FCA’s thematic review into the fair treatment of long-standing customers in the life insurance sector (TR16/2) which found a mixture of good and poor practice.The guidance covers four high-level customer outcomes:- the firm’s strategy and governance framework results in the fair treatment of closed-book customers;- the firm’s closed-book customers receive clear and timely communications about policy features at regular intervals and at key points in the product lifecycle to enable them to make informed decisions;- the firm gives adequate consideration to, and takes proper account of, fund performance and policy values in a way that ensures it treats its closed-book customers fairly and proportionately;- the firm’s closed-book customers are able to move from products that are no longer meeting their needs in a fair and reasonable manner.

Sipps firms included in FCA’s tougher closed-book stance

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