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Standard Life hit with £30m fine over annuity sales

The FCA has handed down a fine of £30.7m to Standard Life Assurance Limited.

The regulator says the company did not act in the interests of customers when it offered front-line staff “large financial incentives” to sell annuities.

In an announcement this morning, the regulator says SLAL failed to put adequate measures in place to control the quality of calls between its call handlers and non-advised customers.

The calls targeted customers between July 2008 and May 2016 who may have been entitled to an enhanced annuity.

During the period of misconduct, close to a quarter (22 per cent) of SLAL front-line staff received more than 100 per cent of their basic salary in bonuses.

SLAL says it has reviewed its processes and is keen to “put things right”.

FCA enhanced annuity review points to value of advice

The company is now owned by insurer Phoenix Group after it was sold off by former parent Standard Life Aberdeen last August.

SLAL has so far refunded £25.3m to 15,302 customers after agreeing to a past business review in January 2017. This followed the FCA’s call in 2016 for a number of firms to carry out a review on sales of enhanced annuities.

The FCA says sales incentives for annuity products at the time of SLAL’s misconduct led to significant risk that front-line staff would fail to provide customers with necessary information to choose an annuity appropriate to their circumstances.

FCA executive director of enforcement and market oversight Mark Steward says SLAL staff were also given “significant discretion” on how they communicated with prospective annuity customers.

He says: “As part of the sales process for non-advised annuities, firms are required to explain to customers that they may get a better rate if they shop around on the open market.

70 per cent or retirees unaware enhanced annuities exist

“Firms need to provide clear, fair and not misleading information to help the customer make an informed decision about what product to buy.

“SLAL used high level call guidelines and this meant that the firm failed to provide some customers with appropriate information.”

The full review into SLAL’s past business dealings is being conducted under Phoenix and is expected to wrap up at the end of this year.

SLAL chief executive and Phoenix Group director of open business Susan McInnes says: “This is an historic issue and one we were aware of when we acquired SLAL. We have reviewed and updated our telephone practices as part of this process.

“Whenever we get things wrong, we seek to learn from our mistakes and are absolutely focused on putting things right [and] our remediation programme for affected customers is progressing well.”

In a response to the FCA’s statement, Standard Life Aberdeen confirmed it is not part of the investigation into SLAL.

FCA investigates providers over enhanced annuity concerns

SLA says: “We do recognise these failures happened while SLAL was a part of Standard Life Plc, which subsequently became SLA, and we are sorry for the impact this had on some customers.

“When the issues relating to non-advised annuity telephony practices came to light, a programme of work was initiated to tighten up guidance process annuities and controls and since the investigation began, we have worked closely with, and cooperated fully with, the FCA.”

Money Marketing reported in 2016 that the the FCA’s review of enhanced annuity sales would likely see up to 90,000 various customers receive compensation for misselling.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. These were not failures. These were deliberate deceptions. A crime in other words.

  2. I do hope this fine is used to top up the annuitants poor pensions. Sub Standard Life was very rarely even in the top 5 for annuities.

  3. Julian Stevens 24th July 2019 at 8:02 am

    Given that such practices on the part of many if not most life offices, not just on the part of Standard Life, go back many years, well before 2008, one wonders why the FSA didn’t address them by way of a blanket ban on all life offices from including any annuity quotes in their pre-retirement packs other than those based on any GAR’s within that particular policy.

    Whilst this would amount to making OMO the default option, most IFA’s are, I suggest, quite prepared to run a quick annuity comparison without charging for it, with which the client can readily see that their holding insurer isn’t offering the best deal and that consulting an IFA is their best option, even if they may have to pay something for a full outline of their options.

    • But that ‘quick annuity comparison’ would be advice, right? Bit like triage on DB schemes…

      • Julian Stevens 26th July 2019 at 8:47 am

        Here’s the annuity you could get in the OM by comparison with the one you’ve been offered by XYZ Life. That, I would have thought, is just information, not advice or even guidance, and certainly not triage.

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