FSA is accused of heaping pressure on mutual assurers

Steve Dinneen
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THE Financial Services Authority (FSA) has heaped pressure on the mutuals industry, according to the chairman of an all-party parliamentary group for building societies and financial mutuals.

Adrian Bailey told City A.M. that a letter urging "with profit" mutual life assurers to consider their financial viability or consider winding-down had heaped pressure on the industry.

FSA managing director of supervision Jon Pain sent an open letter to the 57 CEOs of mutual life assurers and friendly societies urging them to consider their long-term viability. The letter asked that the firms respond by the end of last year.

But Bailey said the letter was "unhelpful" and could be seen to have had a detrimental effect.

He said: "I think the FSA has provided a degree of uncertainty the mutual industry could do without."

An FSA spokesman said no decisions had been made about specific institutions. He said: "It is certainly not the case that the FSA will be closing companies down.

"We are encouraging a discussion with mutuals and invited them to look at their with-profits business."

Mutuals and friendly societies are owned by their customers, who become members when they buy a "with-profits" life assurance policy.