Life insurers grilled by MPs
27 January 2004
During a heated Treasury Select Committee hearing today, the head's of Britain's biggest insurers were accused of being out of touch with reality for rewarding themselves with fat-cat pay rises at a time when millions of homebuyers are facing damaging shortfalls in mortgage endowments.
Chairman of the committee, John McFall MP, also attacked the chief executive of Edinburgh-based mutual Standard Life, Sandy Crombie, for failing to inform policyholders of the severity of the problems facing the company, describing the quality of Standard's communication with its customers as "fantasy stuff coming out of Lothian Road".
Crombie appeared before the committee's hearing into the long-term savings market alongside Prudential's Jonathan Bloomer, Aviva's Richard Harvey, Andy Haste of Royal & SunAlliance and David Prosser of Legal & General.
Richard Harvey of Aviva conceded that the life insurers could have done more, earlier, to alert policyholders to alert homeowners now facing an endowment shortfall of the potential routes for compensation and the time limits in which to make a complaint.
"We are putting our hands up and saying that an earlier warning to customers about the likelihood of a shortfall or shift in economic conditions would have been a good thing," he said.
The Financial Services Authority estimated that up to 3.5 million policies face a shortfall as a result of the stock market decline since the end of the dotcom boom - a figure in stark contrast to last month's estimate of 1.5 million by industry body, the Association of British Insurers.