With-profits policies provide customers with the positive benefits of access to stock market savings while protecting them from much of the risk of a volatile market, says the ABI today. The Association was responding today to an FSA consultation paper (CP207) on reform of the with-profits industry.

The ABI has been proposing major reforms of with-profits for a number of years in order to secure better information and communication for customers. Much of this agenda has now been adopted by the FSA.

Mary Francis, Director General of the ABI said:

"With-profits policies continue to appeal to many savers because they smooth the peaks and troughs of stock market performance. The FSA and the industry have been working together to ensure that with-profits funds are run openly and fairly for their customers. The need for reform does not stem from customers being treated unfairly, but from the need to keep pace with changing consumer expectations of information and accountability.

This is a consultation paper and we will be discussing these latest proposals constructively with the FSA to deliver further sensible reform."

 -Ends-

Notes

1.            Recent data published by Money Management (December 2003) shows that with-profit bonds have out-performed both UK tracker funds and balanced managed funds over the last 3 years, 5 years, and 10 years. For example, over the last 10 years, the average return on a with-profits bond was 8.2%, compared with 6.4% for the average UK tracker fund and 5% for the average balanced managed fund.

2.            Enquiries to:       

         Alan Leaman        020 7216 7440 (Mobile: 07957 482330)

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         Malcolm Tarling     020 7216 7410 (Mobile: 07776 147667)

         Lucy Butler           020 7216 7411 (Mobile: 07712 841184)

3.            The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

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