(Reuters) - Britain’s financial watchdog has fined Standard Life Assurance Ltd (SLAL), part of insurer Phoenix Group (PHNX.L), 30.8 million pounds ($38 million) for failures related to the sale of annuities.
SLAL said some 80,000 clients were potentially sold the retirement product, which provides a regular income either for life or a set period, without financial advice.
SLAL failed to put in place adequate controls to monitor the quality of the calls between its call handlers and customers who selected the annuity, the Financial Conduct Authority (FCA) said.
The FCA also said SLAL offered its front-line staff large financial incentives to sell the annuities, which encouraged them to place their own financial interests ahead of those of their customers.
Call handlers could receive significant bonuses and rewards if they met or exceeded sales targets. During the period of misconduct, nearly 22% of call handlers received more than 100% of their basic salary in bonus payments, the FCA said.
“This gave rise to a significant risk that SLAL’s call handlers would fail to provide customers with the information they needed to choose an annuity appropriate to their circumstances,” it added.
As part of the sales process for non-advised annuities, firms are required to explain to customers that they may get a better rate if they shop around on the open market.
The fine follows the launch of an FCA review into the sale of some annuities in 2016, after which its enforcement division began investigating firms to see if further action was needed.
Phoenix in a separate statement on Tuesday said the non-advised telephony practices were a “known issue” at the time of its deal with Standard Life, and that an agreement had been put in place to cover the costs of the enforcement action.
“While this is an historic issue and one we were aware of when we acquired Standard Life Assurance Limited, we would like to apologize to affected customers, all of whom we have already been in contact with as part of the program of customer redress,” SLAL Chief Executive Susan McInnes said.
Phoenix said it has already dealt with more than 80% of the affected clients, with provisions made for redress.
Shares in Phoenix were up 0.4% at 0954 GMT, broadly in line with the wider market. Shares in Standard Life Aberdeen were up 1.8%.
Reporting by Noor Zainab Hussain in Bengaluru; editing by Simon Jessop and Jason Neely