FSA fines Scottish Equitable £2.8m plus £60m redress
The FSA has fined Scottish Equitable £2.8m for causing significant consumer detriment through poor administrative procedures.
Scottish Equitable will pay consumer redress of about £60m, of which £30m will have been paid by the end of the year. Scottish Equitable is the legal name for Aegon’s UK life and pensions business, which now trades under the Aegon brand.
In 2009, Scottish Equitable informed the FSA that it had identified around 300 issues relating to problems in administering its policies.
These problems included not issuing around 238,000 policyholder documents, incorrectly calculating guaranteed minimum pension payments and future benefits of 774 customers and failing to identify errors in calculating rebates to charges on pension policies for 25,000 policies.
The company also failed to match Department for Work and Pensions contributions to personal pensions for around 2,500 customers and failed to trace around 200,000 policyholders who had moved without informing Scottish Equitable of their new address.
The total consumer detriment is estimated to be £60m and Scottish Equitable is undertaking a redress programme to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions.
The FSA says Scottish Equitable has already started to compensate consumers and will have paid £30m in redress by the end of 2010.
Scottish Equitable qualified for a 30 per cent discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £4m.
FSA managing director of enforcement and financial crime Margaret Cole says: “The redress package is significant news for the customers of Scottish Equitable and I am pleased that £30m will already have been paid back by the end of the month.
“This case shows the importance of getting customer administrative procedures right and fixing them quickly when they go wrong. This is a key part of treating customers fairly.
“By letting the issues build up over such a long period Scottish Equitable made it even more difficult to fix the problems and this led to delays in getting compensation to customers.”
Aegon says it fully accepts the FSA’s findings and is on target to resolve all five of the issues identified by the end of April 2011. It adds it expects the bulk of the remainder of the programme to identify and correct historical issues within its customer policy records to be completed by the end of 2011.
In a statement the provider says: “Aegon sincerely regrets that some customers have suffered financial detriment or inconvenience. Its redress programme aims to resolve all the issues as quickly as possible and is a top priority for the firm.”