£31m fine for Standard Life Assurance for mis-selling
● Fine relates to sales of retirement annuities by firm ● Business sold by Standard Life Aberdeen in 2018
Standard Life Assurance has been fined £31 million by the City regulator for failures relating to sales of retirement annuities.
Standard Life Assurance Limited (SLAL) – formerly part of the Standard Life Aberdeen group – failed to adequately monitor the quality of the calls between its callhandlers and non-advised customers, with risks that staff would put their own financial needs ahead of their clients, the Financial Conduct Authority (FCA) said.
Frontline staff were offered large financial incentives to sell annuities, which gave rise to a “significant” risk that SLAL’S call-handlers would fail to provide customers with the information they needed to choose an appropriate annuity, said the regulator.
For instance, where customers have health or lifestyle factors that may shorten their life expectancy, they may be eligible for an enhanced annuity – which could mean a better rate.
The FCA stated that SLAL used “high level” call guidelines, which gave call-handlers significant discretion about how they communicated with customers.
In January 2017, SLAL voluntarily agreed to conduct a past business review to identify and pay redress to customers who were likely to have suffered, or did suffer, loss as a result of its failures.
By the end of May this year, SLAL had paid around £25.3m to more than 15,300 customers.
Based on payments made to date, the estimated total redress payable will be around £61.2m, the FCA said.
This covers back-payments and interest paid to affected customers to put them in the position they would have been in had they bought an enhanced annuity.
Imposing a fine of £30.8m, the FCA said customers require accurate information when choosing a complex financial product such as an annuity.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “[SLAL’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.”
SLAL’S past business review is ongoing under the ownership of the Phoenix Group, which bought the company last year for just under £3m, and the firm expects to complete this by the end of 2019.
Additionally, SLAL did not dispute the regulator’s findings, which meant that it qualified for a 30 per cent discount. Otherwise the FCA would have imposed a financial penalty of almost £44m.