The UK financial regulator fined a business linked historically to Standard Life Aberdeen for failures relating to selling annuities without financial advice.
Incentivising sales staff to sell non-advised annuities led to call handlers putting their own financial interests ahead of their customers’ interests, the Financial Conduct Authority (FCA) said as it fined Standard Life Assurance £30.7 million.
Standard Life Aberdeen sold Standard Life Assurance to Phoenix Group in August 2018, but the offences date back to between July 1, 2008, and May 31, 2016.
The Standard Life-Aberdeen merger took place in 2017 and in January of that year, Standard Life Assurance voluntarily agreed to conduct a past business review to identify and pay redress to customers who had, or may have, suffered loss.
The FCA said the firm failed to put in place adequate controls to monitor the quality of calls with non-advised customers and there was therefore a significant risk that call handlers would fail to provide customers with significant information to help with choosing an annuity, such as whether any lifestyle factors meant enhanced annuities were possible.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Standard Life Assurance Limited’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.”
During the period of misconduct, nearly 22% of call handlers received more than 100% of their basic salary in bonus payments.
As at May 31, 2019, the firm had paid approximately £25.3 million to 15,302 customers.
The past business review is ongoing under the ownership of the Phoenix Group and the firm did not dispute the FCA’s findings.
Susan McInnes, chief executive of Standard Life Assurance Limited and a Phoenix Group director, said: “While this is an historic issue and one we were aware of when we acquired Standard Life Assurance Limited, 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.”
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