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LONDON, March 3 (Reuters) - Britain's financial watchdog isinvestigating six insurance firms including Prudential and Old Mutual over their treatment of long-time lifeinsurance customers.
The other firms involved were Abbey Life, Scottish Widows,Countrywide and Police Mutual, the Financial Conduct Authority(FCA) said.
The financial watchdog has been monitoring whether insurershave treated customers locked into pension and other savingsplans fairly compared with new customers.
As part of this assessment, the FCA sampled a number ofdocuments sent to customers who had requested either tosurrender or transfer their policies. The FCA said the six firmsmay have failed to inform customers of charges they were likelyto incur.
"The practices at some firms appear to have been poor,"acting FCA Chief Executive Tracey McDermott said in a statementon Thursday.
An investigation could lead to the FCA imposing fines ordemanding insurers pay compensation to policy holders.
"The regulator isn't pulling any punches, and looks set totake action across the life industry based on these findings,"said Matt Browne, conduct risk director at PwC's insurancepractice.
"The review is going to have a big impact on life assurers."
Insurers are already under regulatory strain due to a numberof recent changes including major pensions reforms, which couldinclude a cap on charges.
Old Mutual, Scottish Widows and Countrywide Assured-ownerChesnara said they would cooperate fully with theregulator. Shares in Chesnara were down 5 percent.
Deutsche Bank, which owns Abbey Life, declined tocomment, while Prudential and Police Mutual did not immediatelyrespond to requests to do so.
A briefing to some media outlets in 2014 by the FCA that aninitial review was planned prompted a slump in insurer stocksand led to an inquiry and the departure of the watchdog'sdirector of supervision.
It is also as having contributed to the early exit of theFCA's former chief executive Martin Wheatley. (Reporting by Richa Naidu and Carolyn Cohn; Editing by SineadCruise and Keith Weir)
