Standard Life has been fined £2.45m by the FSA for inappropriately marketing its pension sterling fund to risk-averse investors and failing to adequately investigate complaints.
Money Marketing broke the news last January that Standard Life had revalued its pension sterling fund, resulting in a fall in value of 4.8 per cent. Around 98,000 investors saw their assets drop.
Last week, the FSA criticised the firm for referring to the fund in its promotional mat- erial as being “wholly invested in cash” when, in fact, the majority was invested in floating-rate notes.
The FSA says Standard failed to ensure there were proper systems and controls in place, specifically regarding marketing material, and that this resulted in a risk of unexpec ted capital losses for investors, which was demonstrated by last January’s fall in value.
The FSA also criticises the firm for failing to carry out a prompt and full investigation of concerns regarding the marketing material but noted that Standard proactively injected over £100m into the fund to restore the value of investors’ holdings.
FSA director of enforcement and financial crime Margaret Cole says: “The failures at Standard Life arose because there were inadequate systems or controls in place to ensure that marketing material issued accurately reflected the investment strategy for the fund.
“There were inadequate processes in place to enable effective communication between business areas and committees resulting in a lack of awareness of any divergence.”
Syndaxi Chartered Financial Planning managing director Robert Reid says: “Standard Life did not handle the situation properly at all. If it had not been for the press having a go, they would have swept it under the carpet.
“The firm was taken through it kicking and screaming so I think the fine is totally just. I hope they have learned from their mistake. It has been extremely disappointing.”
Informed Choice managing director Martin Bamford says: “The fine is a bit unfair as Standard Life did compensate investors but it is important that providers and fund managers are made to be honest about the make up of funds and categorise risk accurately. It is good to see the FSA is looking at this because it has hurt a lot of investors in the past few years.”
A Standard Life spokesman says: “We have learned important lessons from this mistake and have made significant improvements to our marketing literature proc- esses to prevent the same thing happening again.”