THE FINANCIAL Services Authority has fined Scottish Equitable £2.8m for causing significant consumer detriment through poor administrative procedures.
Scottish Equitable, which now trades under the Aegon brand, is also being forced to pay consumer redress of about £60 million, of which £30 million will have been paid by the end of 2010.
The provider had failed to issue around 238,000 policyholder documents, incorrectly calculated guaranteed minimum pension payments and future benefits of 774 customers and failed to identify errors in calculating rebates to charges on pension policies for 25,000 policies.
It had also failed to match Department of Work and Pensions contributions to personal pensions for around 2,500 customers and failed to trace around 200,000 policyholders who had moved without informing Scottish Equitable of their new address.
The total consumer detriment from the 300 issues identified by Scottish Equitable is estimated at £60m. Scottish Equitable is undertaking a redress programme to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions. Scottish Equitable has already started to compensate consumers and will have paid £30m in redress by the end of 2010.
Scottish Equitable qualified for a 30 per cent discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £4m. The FSA has taken into account that Scottish Equitable co-operated with the FSA and has committed substantial resources and time to rectifying the issues identified.
Margaret Cole, FSA managing director of enforcement and financial crime says: “The redress package is significant news for the customers of Scottish Equitable and I am pleased that £30m will already have been paid back by the end of the month.
“This case shows the importance of getting customer administrative procedures right and fixing them quickly when they go wrong. This is a key part of treating customers fairly.”