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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.”

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Comments

There are 28 comments at the moment, we would love to hear your opinion too.

  1. This should pay for the FSA xmas party. What do the FSA know TCF? Nothing! Scot Eq did not deserve this and by taking money off the company it is the policyholders and shareholders who suffer. If they really want to look at poor service, suggest FSA look at Phoenix and the much maligned Scottish Life. I do not think that Scot Eq’s service is any worse than anyone else but fines are meant to be punititive and I do not think Scot Eq have doing anything wrong, they have not ripped off dients or anything like that.

  2. The FSA are clearly out of touch with everything. Regulation has taken over industry procedures and has made a laughing stock of the UK. David Cameron reiterated in his pre election speech that regulation is killing industry and is not letting people get on with their lives and as a result business is suffering. The financial services sector is a diabolical discrace, even clients are now complaining about the onerous paperwork that they have to complete, only to be told by the organisation that was set up to protect them(FSA) that this is what is required. Can somebody please have some common sense and save this sinking ship that is the UK financial services sector !

  3. ^ Scottish Life have had excellent service levels for some years, and have just been awarded Five Stars for the same.

    Aegon, however, have had well-known administrative failures for years. Why IFAs continued to support them, knowing that, is beyond me.

    Obviously their no-clawback commission terms under Dual AMC had no impact on that decsion.

  4. I’m going to say to “pissed off IFA” – are you for real? At what point is it ok to miscalculate payments and rebates to customers? Be it down to administration errors, the end result is still that customers have suffered financial detriment. Whilst it is not “ripping the customer” off as such, you still expect firms to have robust SYSC in place to spot such errors promptly and ensure similar issues are not arising elsewhere? Whilst the FSA is not exactly surrounding itself in glory at the moment, I do think they are damned if they do and damned if they don’t.

  5. Dear Pissed off IFA. Ref yuor last sentence, please re-read the article!

  6. David Trenner - Intelligent Pensions 16th December 2010 at 12:04 pm

    Read the article!! You have no reason to be P*ssed off if you are really an IFA!

    “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.”

  7. Re 1st comment. Scottish Life?? Have they not just won numerous awards?

  8. Surprise Surprise its FSA bashing time again.

    I dont know why there is any sympathy for AEGON SE as frankly their service standards are appalling. This is just the tip of the iceberg.

    A company who is only interested in “flogging” products cannot and should not survive in todays world.

  9. The voice of Reason 16th December 2010 at 12:11 pm

    Pissed of IFA, I take it you are only using Scot Eq or work for them if you feel their service is comparable to others in the market. Yes the fines seem high but it is the same rule that apply to all companies and should “A Nother Company” have had the same issues on the same scale then you would expect the same penalties. You seem to have missed that the bulk of it is redress, i.e. correcting the position of the client. Redress as I’m sure you will be aware is not just enforced for companies but for IFAs alike. The £60m just demonstrates the scale of the problems.

  10. @ Derek Campbell

    I fail to see how Scot Equitable’s failings are somehow the result of the FSA? Looks like FSA have done their job here and customer detriment has been averted.

    Hell, a nice rant against FSA is justified at certain times, but this is not one of them!

  11. If the FSA start charging life companies for poor service they will make a fortune.

    The level of service I experience from most companies is nothing short of a disgrace and most of the staff could not care less.

    as for 5 star awards these are a joke, I have had many companies asking me if I would vote for them, with little thought to the actual service they provide.

    the whole way of arranging products for clients needs to be simplified, just getting clients to complete multiple bits of paper is not the way forward. Simplified products, higher qualifications and more emphasis on the advice provided and not the number of pieces of paper.

    The next thing they could do is start charging the banks for poor service, now that is a way to start making money.

  12. I have read Anonymous re. FSA bashing time again. It is no wonder this person wants to remain anonymous, perhaps they work for the FSA. FSA are now a totally discredited body who cannot be trusted similar to the German SS.

  13. Totally agree with sandyb !

  14. Not issuing 238,000 documents? Errors on 25,000 policies?

    The insurer has got off light. The FSA closes down IFAs for less.

    Then very few IFAs would be likely to employ ex FSA staff: or is that cynical?

  15. Lets all be honest with each other here, ASE througherly deserved the fine imposed on them by our regulator and I understand that they have taken that on board, but, what they have done (and were puuting right themselves by the way) pales into insignificance to what our regulator has done and is still doing to all in our industry ……. will they fine themsevles and by how much????

    Don’t hold your breath on that one eh!

  16. Should be enough for another few christams parties though!!

  17. At last the FSA are taking action against firms that do not have the right level of staffing and systems in place.

    When are they going to start fining the big Banks for the same thing. I have a SIPP loan case at present with one of the big four 2 months in the pipe line no response reason given LACK OF STAFF.

  18. I acknowledge some of the good done by FSA but when will they fine themselves for their delays, their ineptitude and their creation of beauocracy second only to the political quagmire?

  19. 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.

  20. 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!

  21. 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.

  22. 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 and failing to match 2500 DWP PPP contributions are not regulatory burdens but legal obligations!

    Come on guys for once give the FSA some credit stepping in and forcing a poorly administered provider to compensate their (and your) clients.

  23. Aegon deserve to be given a kick – but hell, if Aegon are having administrative problems and causing consumer detriment then, in my experience, AVIVA should be closed down.

    However, the FSA and the ICO are largely responsible for the bureaucracy that we are all drowning in – and until some common sense returns to what is necessary and what is NOT then financial services administration will go from appalling (now) to dire to a state of rigamortis.

  24. The FSA have acted fairly here, if anything too leniently. Scottish Life who have been understating charges on their illustrations will probably be the next in the firing line.

  25. The FSA didn’t ‘step in’ . AEGON effectively reported themselves and instigated remedial measures – for which they deserve immense credit.

  26. Lord Lucans nanny 21st December 2010 at 11:49 pm

    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.

  27. 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….

  28. I say that they should not be even allowed to compete at a professional level. Would you believe that on some older policies they have a “charges available on request” which are not made revealed because they are sensitive information. It turns out that it involves a “complex” formula involving surrender value and time but applied every year to a policy. Crooks. Pension industry defends itself to unacceptable dishonest levels. Any whistleblowers out there who do not have AeGOn pension in place ?

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