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Gan bill could top £45m after big fine

Gan Life has been fined £1.4m for serious failures in handling complaints, many from misselling victims, and the total compensation bill could reach £45m.

The PIA found that Gan former management had deliberately cut corners on settling complaints to reduce costs and “manipulated” cases that were before the ombudsman to avoid attracting the PIA&#39s attention.

The review revealed that many of the mishandled complaints concerned policies sold as 10-year plans when they were, in fact, 25-year plans or whole-of-life plans.

The failings relate to a 10year period between 1988 and 1998 before the company was bought by Life Assurance Holding Corporation in March 1998 and renamed GL&P.

LAHC is meeting the cost of the fine, which is the PIA&#39s second-biggest fine, but the compensation bill will be paid by GL&P&#39s former French parent Gan through an indemnity arrangement agreed at the time of sale.

LAHC has already rev-iewed nearly 46,000 policies and £35.4m compensation has been paid to nearly 34,000 customers.

A further 21,000 similar GL&P policies are being rev-iewed, for which £5m to £10m has been set aside for redress, meaning the compensation bill could top £45m. GL&P was also ordered to pay costs of £22,500.

The PIA found more than three-quarters of complaints were mishandled. A third of complainants had not rec-eived compensation when they should have done or had got less than they were entitled to.

Even when internal reports backed up complaints, GL&P failed to disclose the reports to policyholders.

Head of regulatory enf-orcement Peter Bibby says: “This case emphasises the importance of dealing with customer complaints in a fair and responsible fashion.

“The rules relating to complaint handling are an important element of investor protection and this case shows we will take seriously failures in complaint handling.”

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