Prudential Assurance Company has been fined almost £24m by the Financial Conduct Authority for failings in selling non-advised annuities.
The FCA took action against Prudential with regards to sales between July 2008 and September 2017.
The FCA found Prudential had failed to ensure that customers were consistently informed that they may get a better deal if they shopped around and didn't take reasonable care when considering the fair treatment of its clients.
At the same time the provider failed to monitor calls between its call handlers and customers and failed to ensure the documents used by call handlers were appropriate.
Between July 2008 and September 2017 Prudential’s non-advised annuity business sold annuities directly to existing Prudential pension holders.
But firms are required to explain to customers that they may get a better rate if they shop around on the open market and the FCA found that Prudential was aware that many customers could get a higher income in retirement if they were to shop around.
As clients approached retirement Prudential wrote to them providing information about their options.
But the firm also contacted clients by phone and the document used by call handlers resulted in many failing to mention the open market option.
Handlers would also make statements during calls that could discourage a customer from shopping around for a better deal, the regulator alleged.
The FCA found the calls were not monitored adequately by Prudential.
Prior to 2013, staff at Prudential were also paid high bonuses if they exceeded sales targets and could potentially earn an additional 37 per cent on top of their base salary as well as be awarded prizes such as spa breaks or weekend holidays.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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.
“Prudential is now rightly focused on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers.”
Prudential voluntarily agreed to conduct a past business review of non-advised annuity sales to identify any customers who may be entitled to redress as a result of the firm’s failures.
As of September 19, 2019, Prudential has offered approximately £110m in redress to 17,240 customers .
The provider did not dispute the FCA’s findings meaning it qualified for a 30 per cent discount. Were it not for this discount the FCA would have imposed a fine of £34,107,200.
In a statement Prudential said: “We are deeply sorry for the historic failings in our non-advised 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.