Standard Life faces redress bill of up to £125m over annuity review


Standard Life may have to pay out up to £125m as part of its review of non-advised annuity sales.

The provider has said it is carrying out a review of all non-advised annuity sales from July 2008 to investigate whether customers were given enough information about the ability to take out an enhanced annuity.

It follows a review of 1,200 non-advised sales at seven firms by the FCA, which found providers were failing to inform customers they may qualify for an enhanced annuity.

Last week the FCA said a “small number” of firms were being investigated by its enforcement team.

The Herald reports an analyst note from investment banking firm Jefferies put the cost of redress to Standard Life at around £125m.

Prudential is estimated to face a compensation bill of £200m, though the insurer has not said whether it will be reviewing its sales.

Jefferies equity analyst Anasuya Iyer says: “Standard Life sold around 150,000 annuity policies over the July 2008 to April 2015 period worth £2.4bn of annuities, nearly all of which are non-advised sales.

“Over the period [Prudential] sold around £8.6bn worth of UK annuities, where around 55 to 60 per cent were non-advised, non-guaranteed on our estimate, equating roughly to 160,000 customers.”

A Prudential spokesman told Money Marketing: “We never comment on regulatory processes and this is no exception.”

Other providers have also sought to distance themselves from the review.

An Aegon spokesman says: “We’ve not been asked and there’s no suggestion from the FCA of taking this any further. The only communications we have had have been very generic and not about looking into past sales practice. We don’t believe we are in scope for any further review.”

A Zurich spokeswoman says: “We note the outcome of the FCA’s industry-wide review and continue to focus on delivering good customer outcomes, placing the interests of our customers at the heart of our business.”

An Aviva spokesman says: “We welcome the announcement from the FCA. However, we don’t comment on the detail of our conversations with the regulator.

“Our work is primarily focused on supporting further future improvements to the market, rather than on retrospective action. We don’t anticipate having to take any significant retrospective action.”

Royal London says it has not been asked to review annuity sales, though FCA may yet do so.

Legal & General did not respond to requests for comment.