Standard Life has been fined £30.7 million by the Financial Conduct Authority (FCA) over failures in selling non-advised annuities.
The regulator took action against Standard Life Assurance, now owned by closed-book pension provider Phoenix, over enhanced annuity sales between July 2008 and May 2016.
‘Standard Life Assurance failed to put in place adequate controls to monitor the quality of the calls between its call handlers and non-advised customers,’ the FCA said.
‘At the same time, Standard Life offered its front line staff large financial incentives to sell annuities, which encouraged them to place their own financial interests ahead of their customers. This gave rise to a significant risk that Standard Life’s call handlers would fail to provide customers with the information they needed to choose an annuity appropriate to their circumstances.’
The FCA said, when selling non-advised annuities, firms must tell customers they may get a better deal if they shop around, particularly if they are in ill health. If customers are in ill health, they may get better annuity rates through an enhanced annuity.
‘Standard Life used high-level call guidelines, which gave call handlers significant discretion about how they communicated with customers. This meant the firm failed to provide some customers with appropriate information about enhanced annuities, including the option to shop around for a better deal,’ the FCA said.
Staff at Standard Life were paid high bonuses and controls were not put in place to mitigate risks, the FCA said.
Standard Life Assurance, which was acquired by Phoenix last year, was included in the FCA’s review of annuity sales over its previous sales practices. As part of this review it agreed to a past-business sales review in January 2017 and said it would pay redress to customers affected. So far it has paid £25.3 million to 15,302 customers.
Susan McInnes, chief executive of Standard Life Assurance and Phoenix group director of open business, said: ‘While this is an historic issue and one we were aware of when we acquired Standard Life Assurance, we would like to apologise to affected customers, all of whom we have already been in contact with as part of the programme of customer redress.
‘We have also 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. Our remediation programme for affected customers is progressing well and we expect it to be completed by the end of the year.’
Mark Steward, executive director of enforcement and market oversight at the FCA, said: ‘Standard Life Assurance’s controls needed to place fairness to customers at their heart. Here, the financial incentives available to staff for selling non-advised annuities by telephone created conflicts, which led to unfair outcomes for some customers.
‘Firms must have controls in place to ensure they are prioritising fairness to customers.’
J Gilbert, NMA