The FSA is seeking to stop mis-selling compensation being paid out of with-profits funds inherited estates (the money used for smoothing returns etc).
This is a laughably slow reaction to the problem, coming as it does after the majority of the pensions and endowment compensation claims have already been paid out and the firms concerned have efectively got away with it. There is no retrospective element.
Press release -
The Financial Services Authority (FSA) has today published a consultation paper (CP) which proposes that insurance companies will no longer be permitted to charge compensation for mis-selling to the inherited estates of with-profits funds. The proposals relate specifically to proprietary firms and not mutuals.
Q1 Do you agree with our proposal to prevent the use of inherited estates to pay compensation and redress?
Yes.
Q2 Do you agree with our detailed proposals?
No. Because the FSA has acted far too slowly, as evidenced by the statement detailing the expected financial impact in section 10 -
"the bulk of compensation for pension misselling has now been paid."
and
"in relative terms the outstanding bill for with-profits funds is not estimated to be very large."
all previous compensation payments for mis-selling from the inherited estates need to be refunded from shareholders funds.