The UK’s financial watchdog has imposed a penalty of $38.5m (£30m) against Standard Life Assurance for wrongly selling pension contracts to retail consumers
The UK Financial Conduct Authority (FCA) has imposed a penalty of $38.5m (£30m) against Standard Life Assurance for wrongly selling pension contracts to retail consumers.
The Britain’s financial watchdog launched a probe into deceptive practices of sale of annuities by Standard Life Assurance during 2008-16.
The company also offered its front-line staff large bonuses to promote the sale of annuities, which encouraged them to place their own financial interests ahead of their customers. As a result, the call handlers did not provide customers with the required information to help them choose an annuity appropriate to their circumstances.
During the investigation, the watchdog found that SLAL failed to use adequate controls to monitor the quality of the calls between its call handlers and non-advised customers.
FCA executive director of enforcement and market oversight Mark Steward said that Standard Life Assurance Limited’s controls needed to place fairness to customers at their heart. Here, the financial incentives available to staff for selling non-advised annuities by telephone created conflicts which led to unfair outcomes for some customers. Firms must have controls in place to ensure they are prioritising fairness to customers.
On 31 January 2017, SLAL agreed to carry out a review of its past sales practices to identify and pay redress to those customers who were likely to have affected.
The insurer had paid about £25.3m to 15,302 customers as of 31 May 2019. SLAL did not contest the FCA’s findings. As a result, it received a 30% discount on fine which would otherwise have been $55m (£43.9m).
Standard Life Assurance, which is currently part of Phoenix Life after Standard Life Aberdeen sold its UK insurance operation in August last year.
In a separate statement, Phoenix said the telephony practices were a known issue at the time of acquisition of Standard Life.
To cover the costs of the enforcement action, an agreement had been put in place, Phoenix added.
SLAL CEO Susan McInnes said that while this is an historic issue and one they were aware of when they acquired Standard Life Assurance Limited, they would like to apologise to affected customers, all of whom have already been contacted as part of the program of customer redress.
She said whenever they get things wrong, they seek to learn from the mistakes and are absolutely focused on putting things right. The remediation programme for affected customers is progressing well and they expect it to be completed by the end of the year.