Release Date: 30th September 2019
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined The Prudential Assurance Company Limited (Prudential) £23,875,000 for failures related to non-advised sales of annuities between July 2008 and September 2017. Prudential’s business strategy focused on selling annuities directly to its existing pension holders without providing adequate advice or ensuring customers were aware they might secure a better deal by shopping around.
Prudential failed to ensure that customers were consistently informed about the potential benefits of shopping around and failed to take reasonable care to organise and control its affairs. Additionally, Prudential did not ensure that the documentation used by call handlers was appropriate and failed to adequately monitor calls with customers. These shortcomings resulted in customers not receiving clear, fair, and not misleading information about their options, particularly the availability of enhanced annuities for those with health or lifestyle factors that could shorten life expectancy.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, stated, “Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly. These are very serious breaches that caused harm to those customers.”
Key Takeaways for Other Firms:
- Provide Comprehensive Information: Ensure customers are informed about the benefits of shopping around for financial products like annuities.
- Effective Monitoring and Control: Implement robust systems to monitor and control sales practices, ensuring they meet regulatory standards.
- Fair Treatment of Customers: Prioritise customer interests over sales incentives to ensure fair outcomes.
- Transparent Communication: Use clear and appropriate documentation to guide customer interactions and avoid misleading information.
- Regular Compliance Reviews: Conduct ongoing reviews and audits of sales practices to identify and rectify potential issues promptly.
Prudential voluntarily agreed to conduct a past business review of non-advised annuity sales, offering approximately £110 million in redress to 17,240 customers as of 19 September 2019. The firm’s agreement to accept the FCA’s findings qualified it for a 30% discount, reducing the fine from £34,107,200 to £23,875,000.
In conclusion, the FCA’s fine against Prudential underscores the importance of clear communication, proper monitoring, and prioritising customer interests in financial sales. Other firms must learn from Prudential’s shortcomings to avoid similar penalties and ensure fair treatment of customers.
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