Emma RadmoreFCA has published its thematic review of firms’ practices in key areas of the with-profits market that FCA had identified as presenting the highest potential for customer harm. The review focused on:
- investment strategy and management;
- capital management in estate distribution and fund resolution;
- fair allocation of risks and reward between stakeholders in capital management decisions’ and
- governance of with-profits business.
FCA found that most firms were taking reasonable care to manage the risk of customer harm, but it identified a number of specific weaknesses. These included in approaches to fund-level capital management and on excess surplus distribution. There was also evidence that some firms were not using agreed run-off plans appropriately. FCA noted that these have the potential to cause customer harm although there was no evidence that any actual harm had occurred.
It has asked some firms to take action following the review, and will be requiring the CEOs of all firms that operate with-profits business to ensure their firms take account ot the review findings. It will host some round tables to help with this.
