FSA confirms MVR rule change for with-profits

The Financial Services Authority (FSA) has published final rules on the use of market value reductions (MVRs) by with-profits providers.

In 2010, the regulator consulted on uses of MVRs it deemed to be damaging to consumers. Today it published updated Conduct of Business Sourcebook (COBS) rules which state MVRs can only be applied where there could otherwise be a payment to a policy holder which exceeds the value of the assets underlying the policy. The FSA had been concerns with-profits providers were using MVRs to unfairly reduce policy holders' payouts. "Firms generally accepted that the scope for imposing an MVR should be reduced," the FSA said in a policy statement. However, it added: "We recognise that ther...