FSA publishes latest persistency data

The survey shows that while overall levels of persistency have remained broadly constant, these have declined in some product categories.

The FSA is interested in persistency because of the possible detriment that can occur if consumers allow policies to lapse.

Factors that may have contributed to the persistency figures include:

• Negative publicity, particularly about mortgage endowment policies, which has caused consumers to lose confidence;

• Falling and volatile share prices, which have significantly affected investment performance and fund values; and

• The introduction of more flexible products with low or zero exit penalties that enable consumers to lapse their policies without detriment.

The FSA will be carrying out further work to look at the drivers of persistency.

Future shape of the survey

The persistency survey was first introduced in 1995 and the data requirements have varied little in the interim while the financial services market place has developed markedly. Therefore it is possible that some of the data requested from firms may no longer be appropriate.

For these reasons the FSA now considers that it is appropriate to review the persistency requirements. It will consult on any proposals to change the form and content of the survey.

Notes for editors

1. The Financial Services Authority has today published its Eighth Survey on Persistency of life and pensions policies which can be found at www.fsa.gov.uk/pubs/other/persistency_8.pdf

2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

3. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.