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Another huge fine for R&SA

Royal & Sun Alliance Life and Pensions has been hit with a £950,000 fine by the FSA for mortgage endowment-related failings.

The action marks the second time the life office has been fined in less than a year. Last August, the FSA imposed a record £1.35m fine for R&SA&#39s second offence under the pension review.

It was also fined £250,000 by the PIA in 1997 over the pension review.

This time, the company has been fined for breakdowns in the sales of the 35,000 endowment policies sold between 1997 and 1999.

The FSA says up to 20 per cent of R&SA policyholders could have been sold unsuitable policies and may be due redress.

It failed to ensure it only sold endowments to people willing to take the risk that the policy would not pay off their loan in full at the end of its term. R&SA advisers also failed to heed guidance that policies for terms shorter than 25 years should not be sold to consumers unless they were very insistent.

This is the fifth action that the FSA has taken over mortgage endowments and is the third-biggest fine that has ever been imposed by a financial regulator in the UK.

R&SA has set aside £11m for misselling during this period while a further 2,000 short-term contracts have also been reviewed, with £5.6m in compensation offered to policyholders.

FSA managing director Carol Sergeant says: “This further action on mortgage endowment misselling should leave misselling firms in no doubt of our commitment to tackle those firms who make unsuitable recommendations to their customers and to secure compensation for those who have lost out as a result.”

Royal & Sun Alliance UK director, life Peter Hanby says: “The fine and the actions announced today relate to past shortcomings which we very much regret. Royal & Sun Alliance has been working hard and has co-operated fully with the FSA over the corrective action we are taking. Anyone with a legitimate complaint will receive the appropriate redress.”

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