“The accumulation of high costs can in some cases cut off any hope of return”, pointed out the vice-president of the ACPR Jean-Paul Faugère.
The Prudential Control and Resolution Authority (ACPR) banged its fist on the table on Monday about the sometimes expensive costs of life insurance contracts, a product which accounts for nearly a third of French financial savings. “All the signals seem (…) to indicate that a movement of professionals would be appropriate or even necessarysaid ACPR Vice-President Jean-Paul Faugère at the institution’s annual conference in Paris.
“This movement should be characterized by a double requirement, transparency and self-assessment“, he continued, referring to an ongoing dialogue between the ACPR and the professional federation France Assureurs. The gendarme of bankers and insurers, backed by the Banque de France, had in early May called life insurance professionals to order both on their duty to advise and on the fees charged.
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He then pointed toparticularly penalizing entry and management fees if they (customers) are forced to quickly redeem their life insurance contract due to a lack of cash»; and criticized the place of units of account (UC), a “risky allocation” not necessarily “adapted to the needs of customers whose financial situation is fragile at the time of subscription“.
Towards a new recommendation “by mid-2023”
“The accumulation of high fees can in some cases reduce any hope of return“, noted Jean-Paul Faugère on Monday, the potential return on investment ultimately not benefiting essentially “only to financial intermediaries“.
“Unfortunately, we have to note that the account of a good agreement is not there yet today” about the “better transparency and justification of life insurance costs“, had indicated earlier in the day the governor of the Banque de France François Villeroy de Galhau, advancing the possibility of a new recommendation from the ACPR on the subject “by mid-2023“.
Life insurance remains the investment that captures the most savings in France: its outstanding amounted to 1,827 billion euros at the end of October, according to the latest figures available from France Assureurs. Jean-Paul Faugère also mentioned the loan insurance market, another subject of tension this time with the banking players, the latter defending their historic market share linked to the housing loan activity. The ACPR “regularly receives reports on practices that are not very compliant“, he said, also referring to a new recommendation to come.
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