Sun Life UK fails to collect clients’ insurance premiums

In some cases, clients have racked up debt without realising over as many as six months.

The company told FTAdviser it tried to collect premiums gross instead of net in error, which led to customer payments being rejected and leaving their plans in arrears.

A letter sent by the company in July to one customer notified them of the accounting error, referring to arrears starting as far back as January.

The exact value of the arrears has not been included so as to protect the identity of the policyholder.

Sun Life UK told FTAdviser: “We identified plans very quickly and contacted customers…Regrettably we did not contact this customer in a timely manner.”

Asked how the oversight will affect customers’ cover, the company said it will ensure no life cover is affected as a result of the  error while it works to resolve the issue.

We paid some of the premiums ourselves.Sun Life UK spokesperson

At the end of July 2022, the total number of in force policies on Sun Life UK’s books was 472,332.

The company said it migrated customer records “some months ago” onto a new computer system in an effort to provide “improved service and customer options” for the future. 

Regrettably, it said, some “technical issues” arose during the migration which affected a number of plan-holders where the direct debit failed to collect. 

“This was not on a very large scale and we paid some of the premiums ourselves and worked flexibly with customers where we did ask for payment,” a Sun Life UK spokesperson said.

Earlier this month, Phoenix Group announced its acquisition of Sun Life UK for £248mn. In a release about the deal published on August 4, Phoenix Group said Sun Life UK represents around £10bn of the estimated £480bn UK heritage merger and acquisition market. 

FTAdviser approached Sun Life UK’s soon-to-be new owner for comment on the recent accounting error. A spokesperson for the group said it could not comment on the incident because the deal has not yet gone through.

It is expected to close in the first half of next year.

The issue is, many perhaps haven't got the funds to catch up - particularly against the backdrop of a cost of living crisis.Emyr Blease, Holborn Financial

Managing director of Wimbledon-based IFA Holborn Financial Emyr Blease said his general experience with closed-book companies was one of “non-communication”.

“You’re never really sure if they exist in human form,” he said. “Often they operate historical systems which have not been kept up-to-date. This means we’re often as in the dark as the client.”

Asked what clients can do who find themselves in arrears on a life insurance policy, Blease said they have two options: either buy a new policy, or pay back their arrears to regain access to the policy they had in the first place.

"The issue is, many perhaps haven't got the funds to catch up - particularly against the backdrop of a cost of living crisis."

FTAdviser asked Sun Life UK whether there was a deadline by which customers would need to pay off their arrears, but this question was not addressed in its response.

Presented with the scenario by FTAdviser, the Financial Conduct Authority said it was unable to comment on individual firms.

It did add, however: “The FCA’s rules make it clear that we expect firms to ensure the fair treatment of their customers at all times.”

ruby.hinchliffe@ft.com