The research involved reviewing the PPFMs and governance arrangements of mutual, proprietary and conglomerate UK life insurers.
Our interviewees agreed that PPFMs had made a big contribution to improving internal governance.
Other benefits included the insurers' implementation of new management information systems to monitor and report on compliance with PPFMs.
There were variations with regard to the basis for the board's opinion on compliance with PPFMs, too.
Overall, our interviewees agreed that PPFMs were of little use to consumers, and that the wording and format of board statements and with-profits actuaries' reports could usefully be standardised.
Our auditor interviewees pointed out that PPFMs were an important tool in reviewing the "realistic" balance-sheet approach to the preparation of the statutory accounts.
We were surprised to find that PPFMs were not being benchmarked either by the firms themselves or by stakeholders such as independent financial advisers or the FSA.
Despite these disappointing findings, our accountant interviewees generally believed that the implementation of PPFMs had led to improved decision-making and accountability because they had introduced new internal governance mechanisms, such as with-profits committees.
PPFMs and related reforms to the governance framework of with-profits funds represent a significant innovation by the FSA to protect the interests of with-profits policyholders.
PPFMs may not be useful to policyholders in the ways that the FSA had originally envisaged, but their real benefit is improved internal governance.
According to the Financial Services Authority, the PPFMs system is intended to achieve the following three goals:
To strengthen the governance of with-profits business by requiring insurers to manage their with-profits business in line with the principles and practices defined in their PPFMs.