UK insurer fined for annuity sales failings

UK-based insurer Prudential has been hit with a £24 million (AU$43.6 million) fine after failing to advise customers they may receive a better deal on annuities if they shopped around.

The Financial Conduct Authority said Prudential failed to ensure that customers were "consistently informed" that they may get a better deal and failed to treat customers fairly.

The fine relates to direct sales of non-advised annuities that occurred between July 2008 and September 2017 to existing Prudential pension holders.

FCA's executive director of enforcement and market oversight Mark Steward said: "These are very serious breaches that caused harm to those customers. Prudential is now rightly focused on redress and today's financial penalty reinforces the cardinal obligation of fairness that firms owe to customers."

Prudential apologised to customers and said it hopes to compensate most of the 35,000 people estimated to have been effected by the end of October.

"We are deeply sorry for the historic failings in our non-advised annuity business and any detriment this has caused our customers. We are working hard to put this right and are on schedule to offer redress to the vast majority of affected customers by the end of October this year," Prudential said.

The FCA added that the insurer offered incentives to call handlers and their managers which may have caused them to put their own financial interest ahead of ensuring fair customer outcomes.

"Call handlers were incentivised by the possibility of earning an additional 37% on top of their base salary and winning prizes such as spa breaks or weekend holidays," the FCA said.

Prudential did not dispute the FCA's findings and therefore qualified for a 30% discount, bringing the fine down from over £34 million.

Read more: PrudentialFCAFinancial Conduct AuthorityMark Steward
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