Standard Life Assurance has been referred to the Financial Conduct Authority's enforcement division following a thematic review into non-advised annuity sales.
The company, which was acquired by Phoenix Group in August last year, was included in the watchdog's review, which looked at past annuity sales practices and questioned whether non-advised customers had missed out on an enhanced annuity.
The FCA was concerned sales processes at some firms meant consumers were not making informed decisions about buying enhanced annuities.
In October Standard Life confirmed it was one of the providers asked to conduct a review of its non-advised annuity sales.
Phoenix Group has confirmed it was aware of the review at the time of the acquisition and said it expected the costs arising from these reviews "to be covered by the indemnities agreed".
Clive Bannister, chief executive office at Phoenix Group, said: "Standard Life was referred to the FCA enforcement division to consider whether any of the issues identified in the thematic review on non-advised annuities sales warranted further intervention and we continue to work with the FCA on the ongoing investigation."
In its full year results published today (March 5), Phoenix Life said the deal with Standard Life had included a £225m provision to cover potential costs resulting from the FCA’s investigation.
To date, £44m of the £225m provision has been utilised, with £181m remaining.
The group added: "To the extent that total costs post 31 August 2018 exceed £225m, such amounts will be recoverable under the deed of indemnity and related caps up to a maximum of £155m."
Standard Life Assurance was put up for sale following the merger between Standard Life and asset manager Aberdeen in 2017.
As part of the £3.28bn deal with Phoenix, Standard Life Aberdeen acquired a shareholding of just under 20 per cent of the wider group.
Phoenix Group today announced that Campbell Fleming and Barry O'Dwyer from Standard Life Aberdeen have been appointed to the board.
The firm is expected to enter the FTSE 100 index on March 18, 2019.