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Partnership shares under pressure amid FCA investigation

UK annuity provider Partnership Assurance Group confirmed that it is under investigation by the Financial Conduct Authority (FCA) for inducements, after a week in which its share price fell sharply.

Partnership's share price dropped from 440.25p on 17 September to close at 407p on 20 September on the London Stock Exchange (LSE).

The firm - which is backed by UK private equity firm Cinven - specialises in selling annuities to high-risk groups and is dependent on intermediaries for new business.

Last week, the FCA said it had referred two life insurance companies to its enforcement division for potential rule breaches. The firms are being investigated on suspicion of having distribution arrangements in place that could influence advisory services firms.

New rules under the Retail Distribution Review (RDR) introduced in January have made significant changes to the investment advice market, in particular banning commission payments to financial advisers.

Partnership - which only listed on the LSE in June - announced on Friday (20 September) that its subsidiary Partnership Life Assurance was under review by the FCA because of its services agreement with "one advisory firm".

However, the group noted that "the appointment of investigators does not mean that the FCA has determined that rule breaches and/or other contraventions or offences have occurred".

Partnership said that its life assurance unit undertook a review of its distribution services agreements under the new RDR rules.

This included taking independent advice on the agreement in question, as well as on other agreements in place.

In its maiden interim results release in August, Partnership warned that the introduction of the RDR had temporarily reduced adviser engagement with customers for the sale of annuities and disrupted its activities.

But Nomura analyst Fahad Changazi gave the retirement group a boost after the FCA investigation was confirmed, issuing a "buy" rating on the stock and saying it was well placed to benefit from the anticipated significant growth in the UK annuity market.

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