The City watchdog is to investigate policies which penalise people who want to switch providers. Its reviews spans pensions, endowments, investment bonds and life insurance and covers 30 million policies sold between the 1970s and 2000.
There was a big fall at Friends Life insurer Resolution, which was set up in 2008 to consolidate the life insurance industry and is a major manager of closed funds. Its shares dived 7.1 per cent to 296.3p.
Phoenix Holdings – the UK’s largest consolidator of closed life assurance funds – tumbled 11.5 per cent to 652p in the FTSE 250 Index, though it had been down more than 20 per cent at one stage.
The falls were more muted elsewhere in the insurance sector, with Aviva off 2.8 per cent at 470.2p, Legal & General down 3.5 per cent at 205p and Standard Life just 1.6 per cent lower at 380.3p.
Aviva issued a statement saying its treatment of customers had been “fair and appropriate, and therefore any impact on the group’s profits should be minimal, if at all”.
London’s benchmark FTSE 100 index closed 27.26 points higher at 6,615.58, buoyed by gains in heavyweight mining stocks. Commodities trader Glencore Xstrata led the sector’s gains up 6.2p to 313.3p.
A strong start across the Atlantic helped by buoyant US consumer spending figures aided sentiment in the closing hours.
Sterling also held firm as economic figures confirmed the UK economy grew by 0.7 per cent in the final quarter of last year, despite concerns over a larger-than-expected current account deficit. The pound remained at $1.66 and €1.21.