Response on TR16/2: Fair treatment of long-standing customers in the life insurance sector

In this briefing note we consider the Financial Conduct Authority's TR16/2 review, welcoming the effort that the FCA have put into carrying out this review and in preparing the Non-Handbook Guidance (NHG).

We believe that focusing on good on good customer outcomes has always been important for well-run life insurers, and we agree with the FCA that it is important that all customers should be considered throughout the duration of their policy. 

Hence at a very high level we have no material disagreement with the intentions of the FCA - however we have many concerns around the detail contained in the Thematic Review, including:

• the general thrust of the proposals could make the savings and investment industry less attractive to investors
• some of the FCA’s conclusions based on considering individual elements of the management of business in isolation rather than taking a holistic approach
• proposals would significantly reduce a key attraction of with-profits to customers
• ambiguity as to whether the FCA is considering closed funds or long-standing customers