City watchdog hits Standard Life Assurance with £30m fine for annuity sales failings
The Financial Conduct Authority (FCA) today fined Standard Life Assurance (SLA) £30.7m for failings around its sales of annuities.
The FCA said SLA had failed to put in place adequate controls to monitor the quality of calls between its call handlers and its customers.
At the same time SLA offered staff large financial incentives to sell annuities, which the FCA said encouraged them to place their financial interests ahead of their customers.
The FCA said this led to “a significant risk that SLA’s call handlers would fail to provide customers with the information they needed to choose an annuity appropriate to their circumstances.”
On 31 January 2017, SLA agreed to conduct a past business review and pay redress to customers who were likely to have suffered loss, or did suffer loss, as a result of its failures.
At 31 May SLA had paid approximately £25.3m to 15,302 customers.
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SLA was acquired by Phoenix Group in August 2018. Phoenix is continuing the past business review which is expected to conclude by the end of 2019.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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.”
During the period of the misconduct, nearly 22 per cent of call handlers received more than 100 per cent of their basic salary in bonus payments.
SLA did not dispute the FCA’s findings. Its agreement to accept the FCA’s findings meant it qualified for a 30 per cent discount. Otherwise, the FCA would have imposed a fine of £43.9m.
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Susan McInnes, chief executive of SLA and Phoenix Group director, said: “While this is an historic issue and one we were aware of when we acquired Standard Life Assurance Limited, we would like to apologise to affected customers, all of whom we have already been in contact with as part of the programme of customer redress. We have also reviewed and updated our telephone practices as part of this process.
“Whenever we get things wrong, we seek to learn from our mistakes and are absolutely focused on putting things right. Our remediation programme for affected customers is progressing well and we expect it to be completed by the end of the year.”