Fitch Ratings released a negative outlook for the UK life sector

Fitch Ratings released a negative outlook for the UK life sector

Fitch Ratings has released a negative subdivision outlook for the UK life sector after determining that misselling provisions booked by three firms verified how regulatory scrutiny of historical conduct remains a danger to profitability.

Fitch states that while high levels of capitalism across the market should enable UK insurers to absorb fines and compensation value without any critical effect on their credit profiles significant negative press coverage of coming findings could direct reputational harm and the risk of loss of the company for affected insurers.

Recent Financial Conduct Authority (FCA) proposals created to establish an annuity comparator tool and increase the information provided to clients, after implementation will be expected to diminish the insurer’s exposure to annuity misselling investigations.

Nonetheless, Fitch says the regulator is likely to enhance its attention on other business sectors such as the level of rates charged on saving products.

It is noted that, in their annual results of 2016, Prudential and Standard life published provisions of 175 million pounds related to the potential misselling of annuities.

This caused to have an FCA investigation on whether consumers purchasing standard annuities were given sufficient data about their potential eligibility for an increased annuity. Correspondingly, Phoenix declared a 25 million pounds provision covering both the annuity sales review and another FCA thematic review into the rates charged to long-lasting consumers in the life insurance market, which is concerning Abbey Life business acquired from Deutsche Bank.

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