The FSA has fined Scottish Equitable £2.8m for causing “significant” consumer detriment through poor administrative procedures.
Scottish Equitable will pay consumer redress of £60m, of which £30m was paid by the end of 2010.
Scottish Equitable is the legal name for Aegon’s UK life and pension 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 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 changed address.
The total consumer detriment is estimated to be £60m and Scottish Equitable is undertaking a redress programme to compensate customers.
The FSA says a number of customers who would have been due compensation have died and Scottish Equitable is contacting the custodians of their estates to pay redress.
The company qualified for a 30 per cent discount under the regulator’s settlement discount scheme. Without the discount, the fine would have been £4m.
FSA managing director of enforcement and financial crime Margaret Cole says: “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.”
In a statement, the company says: “Aegon sincerely regrets that some customers have suffered financial detriment or inconvenience.
“The redress programme aims to resolve all the issues as quickly as possible and is a top priority for the firm.”