City firm fined £31million for mis-selling policies to the old and sick

Standard Life Assurance Limited has just been fined £30,792,500 by city watchdog the Financial Conduct Authority.

What did they do to deserve it? Sold people the wrong pensions that would have seen them miss out on money every single year for the rest of their lives.

Worse, it was the people with health problems that were mis-sold.

Announcing the fine, the FCA's Mark Steward said staffs were offered incentives to sell policies over the phone without checking they were suitable "which led to unfair outcomes for some customers".

Significant numbers of staff received bonuses that doubled their salary for making these sales, which saw thousands of customers miss out on an average of more than £1,500 each as a result.

Phoenix Group, which took control of Standard Life Assurance Limited after the issue happened, apologised.

Susan McInnes, current Standard Life Assurance Limited chief executive, said: “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.”

What they did wrong

When the time comes to stop paying in to a pension, and start taking money out instead, you have a lot of options.

But until quite recently, you could choose to trade your savings for a regular income.

The product you use to do this is called an annuity, and they are still available, but there are lots of different versions of these.

Importantly, because they pay an income for life, anyone who has a reduced life expectancy for health or lifestyle reasons is paid more each year.

But in order to get that extra cash, you need to buy an enhanced annuity that takes this into account.

Firms are required to explain to customers that they may get a better rate if they shop around on the open market, they also need to provide clear, fair and not misleading information about enhanced annuities to help the customer make an informed decision about what product to buy.

But the FCA found Standard Life Assurance Limited failed to provide some customers with appropriate information about enhanced annuities, including the option to shop around for a better deal.

It also failed to adequately monitor calls or provide enough information to let senior management discover any failings in quality and volume of call monitoring.

The FCA said, as of 31 May 2019, approximately £25.3 million had been paid out to 15,302 customers.

Phoenix, which bought Standard Life Assurance Limited from Standard Life Aberdeen in 2018, said today it's been working with the FCA to put things right for those customers who may have been impacted between the years of 2008 and 2015.

Some 80,000 customers were potentially affected, although more than 60,000 have already settled with the firm.