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Categories:Regulation

FSA fines Scottish Equitable £2.8m plus £60m redress

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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.”

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Readers' comments (16)

  • Very little support here for Scot Eq and plenty for FSA. Apart from paying for the Xmas party what has FSA achieved? FSA would have been far better to have assisted Scot Eq. It would be good to hear the Scot Eq side of what has gone on. Have found Scot Eq to be one of the more IFA friendly companies.

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  • This is a real 'Catch 22' situation - there is so much bureaucracy, complexity and paperwork, much of it instigated by the FSA that mistakes are inevitable. With everything run by computers, a tiny error immediately affects thousands of people. I'm not excusing Aegon here, just saying that regulation is strangling the life blood out of financial services. We all need protection, pensions savings etc., but it's becoming increasingly difficult to understand, so we don't bother!

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  • Surely this is an example of what the FSA should be doing!

    In this case it is clear that ASE failed in some of their basic administration processes. I meantime "losing" 200,000 customers, not sending 238,000 policy docs and failing to match 2500 DWP PPP contributions are not regulatory "burdens" they are legal obligations!

    Come on guys for once give the FSA some credit stepping in and forcing a poor administered provider to compensate their (and your) clients and working with them to fix the problem.

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  • The FSA didn't 'step in' . AEGON effectively reported themselves and instigated remedial measures - for which they deserve immense credit.

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  • Get real folks. The FSA have created some much beaurocracy (like the 1st post said) that e now everyone has a mountain of sh*t to deal with before actually doing any business. In defense of Scot Equit as soemone already said as well they are IFA friendly. But they have sat on the sidelines far too long and now they are also gettting in the neck. Roll on Andrew Tyrie and kick ar*e at the Leviathan. It's way overdue as all this rubbish is being passed down to the consumer who doesn't trust anyone anymore thanks to the great sea monster still on the loose.

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  • I have been dealing with Scot EQ Complaint's Dept for the last 6 months and I can tell you that these fines have not change their corporate culture of procrasination, deception and LIES that are an insult to a customer.
    They are 3rd Div North when it comes to professional, honest standards.
    AVIOD THEM AT ALL COSTS....

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