open with-profits funds
last updated April 2006
In 2005 the FSA and the ombudsman service agreed, as part of the wider-implications process, a procedure relating to complaints about closed with-profits funds where these arose from ‘management actions’ taken by the fund to protect its solvency and the general interests of all policyholders. See case study WI-A02.
In 2006 the ombudsman service started to receive a small number of complaints about such ‘management actions’ from policyholders in with-profits funds that were still open to new business. The ombudsman service and the FSA jointly identified that some of these cases gave rise to wider-implications issues similar to those relating to ‘management actions’ in closed with-profits funds.
The ombudsman service decides cases on the basis of their individual circumstances, but the interests of the individual policyholder who complains might be in conflict with general interests of all policyholders. The FSA would have an overview of whether or not the fund’s approach to investment was a legitimate exercise of commercial judgement aimed at the interests of its policyholders as a whole.
In the light of this, as with closed funds, the FSA has produced information for consumers to help individual policyholders understand the position and the available options. In turn, this will help the ombudsman service explain the background issue to individual complainants.
The FSA will also provide the ombudsman service with relevant information in relation to the FSA’s overview of particular funds so that the ombudsman can consider, in individual cases, whether a fund’s investment decisions can be regarded a legitimate exercise of commercial judgement aimed at the interests of all its policyholders.