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Paper says FCA to check 30 million 'zombie fund' policies for rip-offs

The logo of the new Financial Conduct Authority (FCA) is seen at the agency's headquarters in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren

(Reuters) - The Financial Conduct Authority (FCA) will announce next week that it is to check 30 million policies sold between the Seventies and 2000 to determine whether customers have been exploited, a British newspaper said.

The FCA review, which will begin this summer, is concerned about insurers using returns from "zombie" funds — which are closed to new customers — to cover costs from other parts of their businesses, the Telegraph said on its website. (http://link.reuters.com/dej97v)

The website said the FCA would say insurers have been "exploiting" loyal policyholders, who are "not given the same priority as new customers" and are charged high fees for substandard service.

The watchdog will say savers could get a free exit from 'rip-off' pensions and investments, or be moved to better deals, the site said.

Details of the inquiry, will look into pensions, endowments, investment bonds and life insurance sold by doorstep salesmen, will be included in the FCA's annual business plan on Monday, the Telegraph said.

The FCA could not be reached outside of regular business hours.

(Reporting by Richa Naidu in Bangalore; Editing by Eric Meijer)