Response to FCA Statement

RNS Number : 5058D

Phoenix Group Holdings

28 March 2014

 



Phoenix Group Holdings ("Phoenix") response to FCA statement

Phoenix notes the statement issued by the FCA earlier today regarding a thematic review into the fair treatment of longstanding or legacy customers within closed life funds.

Although little detail has been provided regarding the scope and nature of any review, Phoenix makes the following observations:

·        The FCA has stated that the review will not consider the suitability of historic advice, nor will it require a review of individual policies.

·        The review will look at the level of servicing provided to policyholders whose policies are managed within closed life funds. Phoenix welcomes this review as we continue to look for areas where we can deliver better levels of customer service. We have achieved significant policy administration migrations to newer and better systems resulting in improved customer service.  We regularly review our full product set to ensure it is operating as intended and remain committed to maintaining our focus on the governance of our products.

·        Phoenix does not write new products (other than vesting annuities) and therefore we do not believe that any review of cross-subsidisation (in particular of the cost of new products) would be relevant to Phoenix. 

·        Furthermore, should the review look at the charging structures on historic policies, we are confident that our historic charging structures, including exit charges, have been compliant and in accordance with our commitments to our policyholders. 

The press speculation regarding the thematic review follows two previous issues which have impacted the life assurance market over the last two weeks:

·     The first of these issues was the announcement by the Chancellor in the Budget last week that policyholders would no longer be required to convert their pensions into an annuity on retirement.  As explained in our full year results announcement, issued on Wednesday 26 March, we believe that this change will not have a material impact on Phoenix. 

·     Yesterday the Government announced a cap for all workplace pension schemes for auto enrolment.  It is estimated that the cost of applying the cap to our schemes could have a maximum impact on our MCEV of £40 million. 

In response to the statement from the FCA, Clive Bannister (Phoenix CEO) commented:

"Policyholders are central to everything that we do at Phoenix and we remain focussed on improving our performance and service.  We aim to treat our policyholders fairly at all times. Operationally, we continue to streamline and modernise the business for the benefit of our policyholders. For example, in 2013 we increased the distributable estate by £565 million, with around 115,000 policyholders benefiting from £157 million of estate distributed in that year.

As our recent full-year results amply demonstrate, Phoenix is performing extremely well. This week we announced our highest ever cash generation (£817 million) and MCEV of £2.4 billion.  We remain confident in the outlook for the Group.

We note that the review will not apply "current standards retrospectively" but is designed to "assess whether there is an issue that requires any action".

We will of course co-operate fully with any review conducted by the FCA."

We will update the market when we have greater clarity on the scope and nature of the review.

Enquiries

Investors / analysts
Sam Perowne Head of Investor Relations, Phoenix Group	[phone]
Media
Neil Bennett, Peter Ogden, Tom Eckersley, Maitland	[phone]

 

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