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FSA quizzed Standard on cash fund marketing

The FSA quizzed Standard Life about its marketing of “cash” funds over a year before the outcry which followed the revaluation of the firm’s pension sterling fund.

In 2008, the FSA conducted an industry-wide probe into money market funds. It asked questions about the marketing of the funds, which will have covered Standard Life’s pension sterling fund.

In January 2009, Standard Life revalued its pension sterling fund, resulting in a fall in value of almost 5 per cent. After an outcry from advisers and consumers, the firm agreed to refund the £100m losses in February 2009.

Last month, the FSA fined Standard Life £2.45m over failings that resulted in the production of misleading marketing material for its pension sterling fund.

It found that despite the majority of the fund being invested in floating-rate notes by July 2007, marketing material issued by Standard referred to the fund as being wholly invested in cash from April 2007 to April 2008.

An FSA spokesman says: “The FSA undertook an industry information-gathering exercise in respect of money market funds designed to improve our general understanding of the market. A number of firms were routinely contacted during this exercise which was not part of any enforcement-related activity.

“Although in this context, the firms’ responses did not constitute routine regulatory returns, we rightly expect that all firms provide us with full and accurate responses in all of their dealings with us.

“It is obviously a matter of regret if a firm provides us with inaccurate data and it is a matter which we take seriously.”

A Standard Life spokesman says: “We acknowledge it was not until later in 2008 that we identified the issues surrounding the pension sterling fund. We also acknowledge that mistakes were made surrounding the systems and controls over the fund.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. “Quizzed”? As in “will you give us some information and make sure it is accurate because we have no idea what we are looking for?”.

    Sums it all up really.

  2. Whilst I do not condone any person or organisation giving misleading information and we are best without these individuals or institutions within the industry, it did bemuse me this morning to learn that a West London Mortage Broker was banned for life from giving regulated advice and Standard Life is “Quizzed” and fined after both gave misleading information.

  3. in its response to the FSA report regarding the pension sterling fund Standard Life claimed that it acted as soon as it became aware of the problem concernin g the fund. The FSA report states that Standard Life were advised by internal staff that there were problems, and the FSA report states that there were delays etc within Standard Life regarding investigations.Why is it that this response hasgone unchallenged by the FSA.? Standard Life also states that ‘no heads will roll’ as no individuals were named in the FSA report. If individuals were not responsible then there must have been corporate incompetence. In whichcase at the very least a Director’s head. However, I would be surpirised if any Director will refuse his bonus despite costing shareholders £100, plus in compensation and fines.Reward without responsibility!!l

  4. Incompetent Regulators Awards Team 4th February 2010 at 4:34 pm

    Shows that teh FSA know nothing about financial services and that they employ people who are trying to learn on the job.

    £2.45 million divided up between 2500 FSA staff is just under £1000 bonus each!

    We need to quiz the FSA a bit more…….

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