Fair treatment of long-standing customers in the life insurance sector: FG16/8

In this Finalised Guidance we set out our expectations on the actions life insurance firms should take to treat their closed-book customers fairly.

Show FG16/8 (PDF)

On 3 March 2016 we published a thematic report, TR16/2, setting out the findings from our thematic review of the fair treatment of long-standing customers in the life insurance sector. We found a mixed picture with most firms demonstrating good practice in one or more areas and poor practice in other areas.

We also proposed non-Handbook guidance to improve firms’ behaviour in order to drive better outcomes for customers. This provided detailed information on the actions they should take in order to treat closed-book customers fairly. In line with our Business Plan 2016/17 priorities, we want to ensure that closed-book customers, who have life insurance products that are closed to new business, do not receive less attention than customers who have recently taken out a new product.

Our response

In this paper we provide our response to the feedback we received and publish the finalised guidance. In general, we are proceeding with the proposals we consulted on but have made some changes in response to this feedback.

Who this applies to

Our guidance applies to life insurers who have closed-books. However, product providers and intermediaries should also consider the guidance to inform their practices and processes in respect of all products, including actively marketed products, in which long-standing customers are invested, as many of the same issues will arise.

The guidance will also be of interest to:

  • outsourced service providers as it sets out our expectations of product providers for the fair treatment of closed-book customers in outsourced arrangements
  • trade bodies, consumer groups, and consumers themselves, as it sets out our expectations on how consumers should be treated

Next steps                                                                                                        

We expect firms to review their business practices within three months of today’s date and make changes, where necessary, in light of the guidance.