From The BBC:
Insurance companies have been told by the City watchdog that they must no longer fund compensation from their with-profits investment funds.Fines and compensation from operational failures might previously have come from surpluses in policyholders’ funds. But the Financial Services Authority (FSA) has ruled that shareholders must pick up the bill from 31 July. However, the consumers’ association Which? has said the new rules have been watered down from earlier proposals. It wanted the rules to cover retrospective cases of mis-selling. SurplusesSurplus funds, known as inherited states, have been built up over many decades in the “with-profits” funds of life insurance companies. They have been used to pay compensation and fines, of millions of pounds, imposed on companies as a result of policies being mis-sold. A Which? spokeswoman said that consumers were effectively paying for the companies’ mistakes. Any mis-selling that occurs after 31 July could no longer be compensated using funds…
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