PRA insights on Part VIII transfers
For friendly societies considering a transfer, a recent PRA speech highlights the importance of early planning, member-focused analysis and regulatory engagement. Speaking at the Association of Financial Mutuals Annual Conference, Manuel Sales drew on previous transactions under Part VIII of the Friendly Societies Act 1992, building on the proposals set out in CP12/26.
Using the analogy of a house move, Sales described the transfer process as extending far beyond the final regulatory approval, emphasising the importance of early planning, robust member-focused analysis and effective engagement with regulators throughout a transaction. The speech highlights a number of areas that the PRA considers particularly important, including demonstrating that a transfer is in the interests of members, evidencing the expected benefits of the transaction, understanding the position of overseas members and ensuring that member communications are clear, balanced and accessible.
The speech comes shortly after the publication of the Law Commission’s final report on the reform of friendly society legislation. The report recommends a wide-ranging modernisation of the legislative framework, including repeal of the Friendly Societies Act 1974, alignment of governance requirements with company law and measures to simplify and streamline transfer, amalgamation and conversion processes while maintaining appropriate member protections.
Taken together with the PRA’s recent consultation on friendly society amalgamations and transfers, these developments signal a continued focus on ensuring that restructuring transactions can be undertaken in a more proportionate, transparent and efficient manner. This is likely to be particularly relevant for smaller societies where the fixed costs and complexity of a transfer can represent a significant barrier to consolidation or solvent exit.
Government sets out plans for earlier mental health support
Government pledges earlier support to tackle mental health crises – GOV.UK
The UK Government has published its response to the independent review (chaired by Professor Fonagy) into mental health conditions, ADHD and autism, setting out plans for a renewed focus on prevention and earlier intervention across England. The review found that levels of mental distress have increased significantly, particularly among children and young people, and highlighted the impact of factors including social media, financial insecurity, poorer sleep and increased uncertainty about the future.
Under the proposals, individuals experiencing mental distress would be able to access support based on need rather than having to wait for a formal diagnosis. The Government has also announced plans to strengthen oversight of ADHD and autism assessment services, review advertising practices in the sector and develop a new mental health strategy focused on earlier intervention and improved access to support.
The announcement is likely to be of interest to life, health and income protection providers given the growing link between mental health, economic activity and long-term sickness absence. The review notes that mental health conditions represent a significant factor in labour market inactivity among younger adults and highlights the importance of timely support to help individuals remain in education, employment and wider community life.
While many of the proposals will take time to develop, the direction of intended travel is clear: a greater emphasis on prevention, early intervention and reducing barriers to accessing support. However, it should be noted that the chair of NHS England recently commented (FT Weekend 17 -18 October 2026) on the absence of rigorous analysis from NHS planning and the need for a clear strategy.
Climate risk remains in focus for life insurers
Interest rates in a changing climate 2026.pdf
Developing central climate scenarios: transition risk workshop findings
Recent publications from the Institute and Faculty of Actuaries (IFoA) and EIOPA highlight the increasing importance of climate considerations for life insurers and long-term savings providers, both from a physical risk and transition risk perspective.
The latest findings from the IFoA’s climate scenario workshops focus on transition risk and the challenges firms face in developing suitable best estimate climate scenarios. The working group highlights the significant uncertainty surrounding future policy, technology and market developments, while noting that transition risks can affect insurers through multiple channels, including investment performance, mortality and morbidity assumptions, product demand and wider strategic decision-making. The publication encourages firms to consider how climate-related developments may affect assets, liabilities and business models, rather than viewing climate risk solely through the lens of stress and downside scenarios.
Complementing this work, EIOPA has published research identifying extreme heat as the most significant climate-related liability risk for life and health insurers and pension providers. The report notes that heatwaves are already the deadliest climate-related hazard in Europe and are expected to become more frequent and severe in future decades. EIOPA highlights potential implications for mortality, morbidity and longevity assumptions, particularly for health insurance, income protection and certain life insurance products.
These themes are reinforced by recent actuarial research examining the potential relationship between climate change and long-term interest rates. Whilst significant uncertainty remains, the paper highlights the potential for climate-related developments to influence economic growth, inflation and investment markets over the long term, emphasising the importance of climate considerations within financial modelling and scenario analysis.
Taken together, these publications reinforce the relevance to insurers’ understanding of future operating conditions, customer outcomes, investment performance and long-term financial resilience.
David Gray, Senior Consultant and Actuary at Broadstone, commented “EIOPA’s concerns about affordability and anti-selection are relevant in the context of the FCA’s protection market study. While the FCA highlighted a current protection gap, EIOPA suggest that climate-related increases in mortality and morbidity risks could, over time, place upward pressure on premiums and exacerbate challenges around accessibility and affordability. This raises the possibility that climate change may contribute indirectly to widening protection gaps if insurers, policymakers and consumers do not adapt to evolving risk profiles.”
FCA publishes AI good practice guidance
AI in financial services: good practice and areas for improvement | FCA
The Financial Conduct Authority (FCA) has published examples of good practice and areas for improvement relating to the use of artificial intelligence (AI) in financial services. While the publication does not introduce any new regulatory requirements, it provides a clear indication of the FCA’s supervisory expectations as firms increasingly adopt AI across customer-facing and internal processes. Drawing on the FCA’s supervisory work and industry engagement, the publication includes a series of practical case studies and examples intended to illustrate how firms can apply existing regulatory requirements when developing and deploying AI solutions.
The FCA reiterates that existing regulatory obligations, including Consumer Duty, operational resilience requirements and the Senior Managers & Certification Regime (SM&CR), apply equally to AI-enabled activities. Firms remain accountable for the outcomes delivered by AI systems and cannot outsource responsibility to technology providers or automated processes.
The publication focuses on three areas: consumer outcomes, governance and accountability, and operational resilience. Examples of good practice include clearly identifying the customer need before deploying AI, testing outcomes across different customer groups, maintaining effective human oversight, monitoring live outcomes and considering the needs of customers in vulnerable circumstances. Areas identified for improvement include weak monitoring frameworks, unclear escalation processes and an overly narrow focus on technical model performance rather than customer outcomes.
The publication is particularly relevant as AI becomes more embedded within underwriting, claims handling, customer communications and operational decision-making. The FCA’s message is that firms should adopt a governance framework that addresses the full AI lifecycle, with clear accountability, robust oversight and evidence that AI-enabled processes continue to deliver good customer outcomes. The publication therefore provides a useful benchmark against which firms can assess the maturity of their existing AI governance and control frameworks
FCA review into Child Trust Fund markets
FCA urges young adults to check for unclaimed Child Trust Funds | FCA
Alongside a campaign encouraging young adults to check for unclaimed Child Trust Funds (CTFs), the Financial Conduct Authority has announced a review of the CTF market. The review will examine issues including the extent to which providers are able to maintain contact with customers once they reach age 18, the risk of customers losing track of their savings, and potential barriers that may prevent vulnerable young adults from accessing their funds.
The FCA will also consider whether firms are delivering fair value to Child Trust Fund customers in line with the Consumer Duty requirements. The review comes against a backdrop of significant levels of unclaimed funds, with HMRC reporting that around 760,000 matured Child Trust Funds remain unclaimed.
The findings of the review are expected to be published in 2027 and may provide further insight into the FCA’s expectations regarding customer engagement, communications and fair value assessments for long-term savings products.
FCA Market study on Pure Protection Market
MS24/1.5: Pure Protection Market Study | FCA
The FCA has published the final report from its market study into the distribution of pure protection products, including life insurance, critical illness cover and income protection. The regulator concluded that competition in the market is generally working well for existing policyholders, with a broad range of products available and generally positive customer outcomes. However, it identified a significant “protection gap”, with 58% of consumers holding no protection products and many having never considered their protection needs.
Rather than introducing new regulatory requirements, the FCA has set out a programme of FCA-led and industry-led initiatives aimed at increasing consumer awareness, encouraging consideration of protection at key life events and improving access for underserved groups. Planned actions include consumer awareness campaigns, enhanced adviser engagement, work to reduce delays in obtaining medical evidence and a proposed TechSprint to explore technology-enabled solutions to underwriting and distribution challenges.
The FCA also highlighted the importance of firms continuing to demonstrate good customer outcomes under Consumer Duty and complying with the requirements of PROD 4. In particular, it noted opportunities for firms to strengthen the evidence supporting fair value assessments, target market analysis and the impact of remuneration and distribution arrangements on consumer outcomes. While the report does not introduce significant new obligations for insurers, it provides a clear indication of the areas where the FCA expects industry efforts to be focused over the next 12 to 18 months and therefore receive ongoing supervisory attention.
FCA proposes longer implementation period for closed CCIs
CP26/32: Quarterly consultation paper No. 53 | FCA
The Financial Conduct Authority has published CP26/32: Quarterly consultation paper No. 53, which includes a number of technical amendments to the recently introduced Consumer Composite Investments (CCI) regime. The CCI regime is replacing the UK PRIIPs framework and establishes a common consumer disclosure framework for investment products, with the aim of improving the quality, consistency and comparability of information available to retail investors.
The FCA proposes a number of minor amendments to the CCI rules in the DISC and COBS sourcebooks following feedback received on PS25/20. The changes are intended to provide additional clarity on the application of the regime and support implementation.
Of particular interest are proposed clarifications relating to products closed to new business. Industry feedback has highlighted practical challenges in applying the new disclosure requirements to legacy products, and the FCA proposes to extend the implementation period for CCIs closed to new business by 12 months until 8 June 2028.
Firms subject to the CCI regime should monitor developments in this area. The consultation closed on 12 October 2026, and the FCA will consider the feedback received before publishing its final response and any resulting rule changes.
Important Information
This newsletter is for general information purposes only and should not be relied upon as professional advice. Readers should seek appropriate advice before taking any action based on the information contained herein.
