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Pru’s final pay out for non-advised annuities still undecided

Insurance giant Prudential says it is still unsure how much money will have to be set aside for non-advised annuity sales in half-year results published today.

In February 2017 Money Marketing revealed Prudential had agreed with the FCA to carry out a review into whether non-advised customers were given sufficient information about the option for an enhanced annuity.

It had set aside £400m as at 31 December 2017 to cover the costs of undertaking the review and any related redress.

In the first half of 2018, Prudential agreed with its professional indemnity insurers that they would meet £166m of the group’s claims costs.

The update today says no further amount has been provided in the first half of 2019 while the total amount spent on the review, which is currently expected to be completed in 2019, remains uncertain.

In July, the FCA has handed down a fine of £30.7m to Standard Life Assurance Limited for misselling non-advised annuities.

The slowdown in industry-defined benefit pension transfers also continued, compared with the elevated volumes in the prior year.

The results also confirm Prudential’s plans to demerge its UK and European business M&G Prudential, resulting in two separately listed companies.

After the merger, shareholders will hold interests in both Prudential and M&G Prudential.

The division of the group will see Prudential focus outside the UK on the US and Asian markets.

The group’s operating profit increased by 14 per cent.

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