PS14/5: Response to CP12/38 – Mutuality and with-profits funds: a way forward

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In this policy statement (PS) we summarise and give response feedback to CP12/38 – Mutuality and with-profits funds: a way forward.

Why are we publishing this policy statement?

In December 2012 the FSA consulted (CP12/38) on the issue of mutual with-profit life assurance providers (mutuals) which are facing declining levels of with-profits business, or which already have with-profits funds in run-off.

This policy statement confirms that, taking into account comments received to CP12/38, we will proceed with the proposed option of seeking a rule modification which would allow mutuals with a viable business plan to continue after their with-profits funds have run-off. It recognises that the method outlined is one of a number of options with-profits mutuals could use to continue operating, and also sets out some principles for firms seeking an alternative.

Policy statement PS14/5

Who should read this paper?

This guidance will affect:

  • with-profits mutuals
  • with-profits policyholders of mutuals
  • non-profit policyholders of mutuals
  • members of mutuals

Next steps

Firms should now consider if this guidance is appropriate to them, and if so follow the processes explained in this PS.

The PRA is making a separate announcement on this subject. To ensure a consistent approach, we have been in regular dialogue throughout the development of this PS and the Statement from the PRA.

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