FSA is consulting on how to improve protection for with-profits policyholders. Following a review last year, FSA thinks firms could improve the way they operate their with-profits funds. FSA’s proposals for rule changes would:

  • enhance the role of the with-profits committee and actuary to strengthen the existing independent advice requirement;
  • require firms to plan how to distribute excess surplus to policyholders;
  • strengthen the requirement that new business backed by the with-profits fund should not have an adverse effect on policyholders’ interests;
  • improve conflicts management;
  • stress how policyholders in mutually-owned funds expect to be treated;
  • restrict the circumstances when firms can impose a market value reduction; and
  • improve the reattribution process.

 It wants comments on its proposals by 24 May. (Source: FSA/PN/026/2011 and CP11/5***: Protecting with-profits policyholders)