Yahoo Finance Prudential fined £24m for annuities sales failings
Prudential has been fined nearly £24m for “serious breaches” after failing to advise customers they might get a better deal if they shopped around for annuities and incentivising staff with spa breaks and weekends away.
The Financial Conduct Authority, the City watchdog, said the failures caused harm to customers affected by the breaches between July 2008 and September 2017.
Prudential apologised to customers and said it hoped to pay compensation by the end of October to most of the 35,000 people it estimates are affected. So far, the company has paid out £110m to 17,240 customers.
As well as failing to ensure customers were consistently informed they might get a better deal if they shopped around, the FCA said Prudential had also failed to properly monitor customer calls and handed out incentives to staff that meant they might “put their own financial interests ahead of ensuring fair customer outcomes”.
Call handlers were given sales-linked incentives, offering them the possibility of earning an additional 37% on top of their base salary and winning prizes such as spa breaks or weekend holidays.
The watchdog said the £23.88m penalty would have been £34.1m if Prudential had not accepted the findings.
Mark Steward, the FCA executive director of enforcement and market oversight, 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 said: “We are deeply sorry for the historic failings in our non-advised annuity 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.
“Our systems and controls have been significantly strengthened in the past two years through a substantial investment in our business.”
An annuity is a retirement income product that can be bought with a customer’s pension pot and pays them a regular income in return. Prudential stopped selling annuities directly to customers in February 2017.
