Phoenix-owned Abbey Life was unable to complete the Financial Conduct Authority’s (FCA) annuity sales review in the same timeframe as other providers, its financial results have shown.
Last year the Phoenix bought fellow closed-book provider Abbey Life in a deal worth £935 million.
In its company results released today Phoenix said the focus of the integration of Abbey Life has been improving its governance standards.
‘This has been particularly important given the ongoing enforcement action relating to Abbey Life that is being undertaken by the FCA,’ the results said.
In 2015 the FCA launched an annuity mis-selling review, which looked to see if customers missed out on buying enhanced annuities – the findings of the review were released last year.
‘Abbey Life was unable to complete their review of annuities sales in the same timeframe as other providers but this work has now been completed. We are working with the FCA to understand the outcomes of the review and the scope of any further activity,’ the company results said.
In 2014 the FCA also launched a legacy book review of closed-book providers’ treatment of customers, which Abbey Life was included in.
Following this Abbey Life was referred to the FCA’s enforcement division to ‘consider whether any of the issues identified in the thematic review warrant further intervention from the FCA’.
This investigation is ‘ongoing’ the company said.
Overall for the six months ending 30 June, Phoenix’s operating profit was £215 million, up from £107 million in the same period last year.
This was helped by £282 million of cash generated from the AXA acquisition it made last year. Earlier this week it was revealed Phoenix were cutting 60 jobs as part of the AXA integration.
In March Phoenix’s independent governance committee (IGC) released its second report and following this the group agreed to cut its workplace pension charges down to 1% at the end of this year.
The company has set aside £28 million to cover this change, the results said.
Clive Bannister, Phoenix’s chief executive, said the firm is keen to continue making acquisitions.
‘The UK closed life market has potential assets of over £300 billion and this market remains our key focus for acquisitions,’ he said.
‘However, the bulk annuity market is a potential complementary source of annuity back books. The market has grown steadily in recent years and there is projected demand of £350 billion over the next ten years, as pension trustees look to de-risk current pensioner and deferred liabilities.’
J Gilbert (NME)