Sun Life UK is facing at least 18 complaints with the Financial Ombudsman after an accounting error which saw clients rack up debt without realising over as many as six months.
The closed book business, which Phoenix Life acquired for £248mn earlier this year, failed to collect around 50 clients’ monthly insurance premiums.
Sun Life UK has since offered each client affected £200, totalling £10,000 in redress.
The company told FTAdviser where it deems “trouble and upset has occurred”, it may offer an appropriate amount of redress by way of apology and recognition of this.
The company did not provide details on the total cost of the accounting error to the business so far.
The company said: “Such an offer of redress is not conditional and does not affect the customer’s right to subsequently refer their complaint to the Fos should they remain dissatisfied with the outcome of the formal investigation into their complaint.”
Sun Life UK told FTAdviser 18 complaints have been filed with the Fos over the error between January and June.
Since June, the Fos said less than 10 complaints have been filed under the ‘General Insurance/Pure Protection’ category, where these complaints would sit.
Sun Life UK’s Fos uphold rate is around half (46 per cent) and some 239 complaints have been filed against the closed book business this year, according to the Fos.
The error
The accounting mishap impacted clients after Sun Life UK tried to collect premiums gross instead of net in error.
This 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.
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 would affect customers’ cover, the company said no life cover was affected as a result of the error while it worked to resolve the issue.
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.
In August, Phoenix Group announced its acquisition of Sun Life UK for £248mn.
In a release about the deal on August 4, Phoenix Group said Sun Life UK represents around £10bn of the estimated £480bn UK heritage merger and acquisition market.
A spokesperson for Phoenix Group said it could not comment on the accounting incident because the deal had not yet gone through.
It is expected to close in the first half of next year.
ruby.hinchliffe@ft.com
