FCA has fined Standard Life Assurance Limited £30,792,500. The fine relates to non-advised sales of annuities, and sales practices over nearly 8 years. Although the sales were non-advised, FCA found that the firm offered large financial incentives to its front line (call handling) staff to sell annuities (with over one fifth receiving more than their basic salary in bonuses) , which meant they were disincentivised to give customers the information the customers needed to be able to choose the right annuity for them. In particular, staff should have both told customers they might get a better rate from shopping around, and should have ensured they gave appropriate information for customers to understand whether they might be eligible for an enhanced annuity.
FCA found the call guidelines the firm provided gave call handlers too much discretion on how they communicated with customers. As a result, it failed to have in place systems and controls appropriate for the high level guidelines and bonus structure. It did not adequately monitor calls and did nor provide sufficient MI to enable senior management to identify the failings.
The firm has been undertaking a past business review for the past few years and has currently paid out around £25m to over 15,000 customers. It expects to complete the review by the end of 2019 and to end up paying over £60m in compensation. The amounts reflect what is necessary to put the customers in the position they would have been in had they bought an appropriate, sometimes enhanced, annuity on the open market at the point of retirement. The firm will also pay these amounts to affected customers for the remainder of their lives.