FSB and the life companies

The Financial Services Board (FSB) does not regulate assurance products; its supervision of life assurers is focused on prudence and market conduct, as opposed to products, Jo-Ann Ferreira, the head of the FSB’s insurance regulatory framework department, says.

Ferreira says no regulations or restrictions govern the underlying funds that an assurer may include in a linked investment policy, which is a policy where the benefits, such as the returns, are not guaranteed but are determined solely by the value of the assets specified in the policy. “The policyholder therefore carries the full investment risk related to the policy,” she says.

“The underlying investments are contractually agreed between the assurer and the policyholder. In other words, the policy contract sets out the particular assets or categories of assets according to the definition of linked policy in the Long Term Insurance Act.

“However, any advice provided to you when investing in an endowment policy is subject to the Financial Advisory and Intermediary Services Act,” Ferreira says.

She says the FSB will, however, shortly consult on amendments to the Policyholder Protection Rules under the Long Term Insurance Act, which will “significantly improve the product design, marketing, and disclosure requirements with which assurers must comply. These requirements, once enacted, will go a long way towards mitigating against the unfair treatment of policyholders.”