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Standard Life referred to FCA enforcement division over annuities

The FCA has referred Standard Life to its enforcement division over issues flagged up in a regulatory review of non-advised annuities.

Last year Phoenix Group acquired Standard Life Aberdeen’s insurance arm in a £3bn deal.

Standard Life’s previous annuity sale practices were investigated by the watchdog as part of its thematic review into the sector.

The review ended last September when the watchdog finally ended its inquiry, more than two years after it originally reviewed 11 providers over how they treated longstanding customers.

The FCA expressed particular concerns about failures in the market in general to disclose exit charges, and whether customers were given enough information on an ongoing basis.

Specifically it wanted to establish whether firms provided customers with sufficient information about enhanced annuities.

The regulator looked at whether firms made customers aware of their potential eligibility for enhanced annuities and whether they encouraged them to shop around in order to potentially get a higher income from another provider.

But in annual results published today Phoenix Group says: “Standard Life was referred to the FCA enforcement division to consider whether any of the issues identified in the thematic review on non-advised annuities sales warranted further intervention.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Here is my thought on how this will go …..

    FCA enforcement will order a S166 on Standard Life (because they (FCA) don’t have the brains to do it themselves) which will cost Standard Life many tens of thousands of pounds, maybe 100’s of thousands, the fact they have had a S166 issued will mean their (Standard Life’s) PI will (at least) treble, again costing many thousands of pounds.

    Who pays ……..sure Standard Life initially, but it will get past on to the customers.

    If Standard Life are not doing things right, then agreed it needs to be fixed, but surely the FCA must have the right people with some brains to determine this and get it corrected, without out sourcing this at the cost of thousands ?

    • I suspect this is not how it will go. S166s are usually before rather than after Enforcement referrals

    • Given the subject and the size of the firm I’d be astonished if the cost of the s.166 was less than a £1m. I’d guess £2-3m in practice when you account for fees, internal time, etc.

      I’m pretty sure SL will be self insured but the point on overall costs is certainly valid and someone has to pay. We know who that is in the end…

  2. Sub Standard Life was guilty of other exit charges. EG. Some of the older bonds had hefty exit charges, but you could transfer to a newer Std L bond and no charge and then exit without penalty. Same story with pensions, but there was also a transfer charge.

    Over 20 odd years this firm has gone from being a well respected provider of life and pension products to the husk that it is today.

    • Julian Stevens 5th March 2019 at 6:35 pm

      But what does that have to do with allowing policyholders to buy poor-rate annuities (assuming it failed to inform them that better rates were probably available in the OM, particularly if they had health issues that might have enabled them to secure a significantly better rate)?

      If Standard Life did inform policyholders that potentially better rates were probably available in the OM, but that information was ignored, it might well mount a defence that it cannot reasonably be held responsible.

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