In March 2016, the FCA published a thematic review (TR16/2) entitled "Fair treatment of long-standing customers in the life insurance sector". In the review, the FCA assessed how firms are operating their closed books and whether they are treating their long-standing customers fairly. The report sets out, as draft non-Handbook guidance, the actions the FCA believes firms should be taking to treat their customers fairly in the future. The FCA has identified some risks which could lead to long-standing customers being treated unfairly, such as firms which benefit from customer inertia by keeping them in high-charging, poorly performing products or by cutting costs in a way that is detrimental to customers. TR16/2 will primarily be of interest to life insurers who have closed-books, and some of the expectation in the draft non-Handbook guidance may be relevant to any firm that deals with customers who are of a long-standing nature.
On 3 June 2016, Herbert Smith Freehills responded to TR16/2 with a range of general comments and specific comments.
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