FCA fines Prudential £23.8m for misselling retirement products
The Financial Conduct Authority (FCA) has fined life insurance and savings company Prudential £23,875,000 for selling retirement income products, otherwise known as annuities, without informing customers if better rates could be found elsewhere.
Calling the insurance firm’s actions “very serious breaches”, the FCA also criticised the appropriateness of documentation used by call handlers and the lack of call monitoring with customers.
Beginning 19 September 2019, Prudential has offered agreed to pay out £110 million in redress to 17,240 customers, equalling out to approximately £6,380.51 for each customer affected.
“Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly,” says FCA’s executive director of enforcement and market oversight. “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.”
The offending period spans from July 2008 to September 2017, where Prudential abused rules which are in place to ensure customers get the highest income in their retirement by shopping around on the open market.
The sales scripts read out by Prudential workers “created a significant risk” of key facts being left out. Sales teams were driven by a 37% increase on their base salary and prizes such as spa breaks and weekend holidays.
By agreeing with the FCA’s findings, Prudential received a 30% discount, avoiding an even larger £34,107,200 fine.