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Standard Life told by watchdog to review annuity sales
October 17, 2016 / 3:47 PM / a year ago

Standard Life told by watchdog to review annuity sales

(Reuters) - Britain’s financial watchdog has asked Standard Life Plc SL.L to review whether it gave customers in poor health enough information when it sold them pension products, the insurer said on Monday.

The Financial Conduct Authority (FCA) has told the firm to review its sales of annuities sold since July 2008 to see if customers eligible for higher payouts because of a shorter life expectancy were properly informed about their entitlement, Standard Life said in a statement.

The request follows an industry wide review by the FCA, which on Friday said that a “small number” of insurance firms could be subject to penalties for their selling practices.

Standard Life said it was not possible to estimate reliably the level of redress it might have to pay as a result of the review, but that it had made a provision in its 2015 accounts for potential customer compensation.

The FCA said on Friday that while it had found no industry-wide problem of annuity mis-selling, some firms may have to pay compensation to customers who should have been sold a different type of annuity -- a form of pension that pays out until death.

In cases where a customer would have been eligible for an “enhanced annuity”, lost income ranged from 120 to 240 pounds a year.

Standard Life, which has been a participant in FCA’s review, said it was possible that the financial impact of any compensation may be mitigated by its professional indemnity insurance.

Standard Life's shares closed down 3.7 percent at 330 pence, making it the third worst performer in London's FTSE 100 .FTSE index.

The FCA did not disclose which insurers had taken part in its industrywide review.

A spokesman for Legal & General (LGEN.L) said the firm was “pleased” with the outcome of the review.

Aviva (AV.L) and Prudential (PRU.L), two other major providers of annuities, did not respond to a request for comment.

Reporting by Esha Vaish in Bengaluru; and Carolyn Cohn in London; Editing by Rachel Armstrong, Greg Mahlich

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