The new rules follow Consultation Paper CP09/09 which was issued earlier this year and proposed that shareholders alone should meet the cost of such failures amid fears that the current rules might not lead to the fair treatment of policyholders.
Currently, proprietary life insurance companies can meet compensation and redress payments using assets that are attributable to their shareholders or, if there are sufficient funds, from the inherited estate of its with-profits fund. However, from 31 July 2009 any liabilities that arise from management failures (including mis-selling) will be borne by shareholders and not policyholders.
Policy Statement PS09/13 can be found by clicking here and Consultation Paper CP09/09 can be found by clicking here.