Shares Up As FCA Clarifies Pension Probe
The City regulator has revealed that it will not individually review millions of pension and saving policies, prompting a share price rise for financial providers.
The Financial Conduct Authority (FCA) clarified the position in its 2014-15 business plan, released on Monday morning.
It comes after almost £2.5bn was wiped off the value of insurers on Friday.
The share price plunge followed comments by FCA director of supervision Clive Adamson to a newspaper about pensions started between the 1970s and the turn of the century.
The Daily Telegraph reported the FCA was planning an inquiry into 30 million policies sold during the period, valued at £150bn.
The chairman of the Commons Treasury Committee, Andrew Tyrie, described the fiasco as an "extraordinary blunder".
In its business plan the FCA said: "We will assess whether firms are operating historic - often termed 'legacy' or 'heritage' - products in a fair way and whether they have adopted strategies that exploit existing customers."
It added: "We have increased our focus on the market for retirement products, such as annuities, with the launch of a major competition study and work to tackle poor sales practices."
An FCA spokesperson told Sky News on Monday it would look into general business behaviour in the sector.
This would include how fairly legacy customers are treated compared with new policyholders, the quality of communications given and what exit fees are imposed.
As a result of the clarification, Britain's big insurance companies enjoyed a share price boost.
In late afternoon trades Resolution was up 1.38%, Aviva up by 1.68%, Legal & General eased but was still 0.63% up and Prudential was 0.23% higher.
Meanwhile, Sky News has learnt that the FCA will this week set out plans for an inflation-busting increase in its budget.
Sky's City Editor Mark Kleinman revealed that its annual funding requirement for 2014-15 would be just under £450m, approximately 3% above the £432.1m it said it required last year.
The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.