The FSA has fined Sun Life Assurance Company of Canada (UK) £600,000 for failings in the governance of its with-profits business.
The company trades under the name Sun Life Financial of Canada.
The failings emerged following two significant transactions the company carried out in 2008 and 2009. The transactions impacted upon one of SLOC UK’s with-profits funds, holding approximately 114,000 policies and £1.2bn in assets.
SLOC UK’s with-profits committee failed to adequately review these transactions, while its board of directors did not approve the transactions. The FSA has not criticised the transactions themselves, but says the review and approval process followed by SLOC UK was deficient. It says this led to an unacceptable risk that proper independent judgement would not be applied to the transactions.
FSA director of enforcement Tracey McDermott says: “It is essential insurers operating with-profits funds ensure policyholders are properly protected.
“The firm fell below the standard required. Its with-profits committee and board, who had primary responsibility for the fair treatment of policyholders, were not adequately consulted on two significant transactions. This was an unacceptable approach to protecting policyholders.”
The FSA sent a Dear CEO letter to with-profits firms in September 2007, which highlighted the need for governance arrangements to include independent challenge of decisions concerning policyholders. The regulator carried out a review of the with-profits sector in June 2010 and published a policy statement on protecting with-profits policyholders in March this year.