The Financial Services Authority (FSA) said that between July 2006 and February last year, the insurer produced misleading marketing material for its pension sterling fund that put its 98,000 retail investors at risk of “unexpected capital losses”.
An investigation by the regulator found marketing material prompted the fund as “safe” and wholly invested in cash – whereas, in fact, the majority was actually invested in risky mortgage-backed securities.
In January 2009, Standard Life slashed the fund’s valuation by nearly five per cent and was forced to pump in £102.7m to restore the value of investors’ savings, following sharp falls in the unit price.
“It is critical that consumers are given an accurate understanding of the nature of investment products and the risks involved,” said FSA enforcement director Margaret Cole. “Without this information, consumers are unable to make informed decisions.”