Newly-listed Partnership Assurance (PA.) has confirmed that its life insurance business is under investigation by the industry’s watchdog. Although the shares barely move on the news, they've already dropped 7% this week on press speculation about the investigation.
The Financial Conduct Authority is looking into a distribution services agreement that a Partnership subsidiary has with an undisclosed firm. The regulator is trying to ascertain whether or not the agreement breaks the rules laid down by the Retail Distribution Review (RDR) which changes the way financial advisory companies operate to avoid any bias towards recommending a certain provider because of commission on offer.
Partnership Assurance says it has reviewed its operations following the introduction of the RDR, which included taking independent legal advice on the agreement that is being investigated.
Management note that the investigation does not mean that the FCA has discovered a problem at the business.
The company listed in June at 385p and now trades at 407.75p. Interim results on 29 August were disappointing with lower new business profits than expected.
The rumours about Partnership were fueled by a notice yesterday from the FCA that it had identified two companies which potentially breached its rules. Partnership received notification from the FCA last night that a probe would be undertaken.