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Royal Liver Assurance beboet door de FSA
City watchdog fines Royal Liver for mis-selling
The insurer Royal Liver Assurance has been fined £550,000 for mis-selling financial savings products to older people, many of whom had no need for the cover they were sold. The life insurer will also have to pay about £2.45m in compensation. The Financial Services Authority said yesterday the "with-profits" policies were recommended as a savings product even though there was a significant risk they could get less money back than they had paid in.
Margaret Cole, the director of enforcement at the City watchdog, said: "This was a serious case of endowment mis-selling, particularly as a significant number of Royal Liver Assurance's customers were nearing retirement age and did not need the cover they were sold. The failings were systemic and arose from weaknesses in the firm's sales and compliance processes and persisted over a long period of time.
"Firms must make sure that they take account of all products which may be suitable when making a recommendation."
The policies were sold by the Liverpool-based group between 1999 and 2003. The FSA said Royal Liver had accepted that a significant proportion of the sales made to people aged 59 and over were likely to have been unsuitable, and could have led to their being financially disadvantaged. Royal Liver will compensate those aged 59 and over at the start of the policy or where payouts will not match the premiums paids. So far, 2,342 customers have asked for premium refunds plus interest.
The FSA said the fine was one of the largest it had issued for such a breach and suggested that without the firm's cooperation, the fine could have been far higher.
A Royal Liver spokeswoman said: "Royal Liver Assurance acknowledges and accepts the official announcement of the outcome of FSA enforcement proceedings." She said the group had also taken action to prevent any further mis-selling.
"The relevant contracts were withdrawn in the UK in 2004 and all policyholders affected have been contacted and offered a full refund of premiums plus interest at an appropriate rate. Royal Liver has worked closely with the FSA on this issue to ensure that the appropriate lessons have been learned and controls have been strengthened as a result."
With-profits policies were the bedrock of the UK life insurance industry but the equity market slump between 2000 and 2003 forced insurers to slash bonuses
Margaret Cole, the director of enforcement at the City watchdog, said: "This was a serious case of endowment mis-selling, particularly as a significant number of Royal Liver Assurance's customers were nearing retirement age and did not need the cover they were sold. The failings were systemic and arose from weaknesses in the firm's sales and compliance processes and persisted over a long period of time.
"Firms must make sure that they take account of all products which may be suitable when making a recommendation."
The policies were sold by the Liverpool-based group between 1999 and 2003. The FSA said Royal Liver had accepted that a significant proportion of the sales made to people aged 59 and over were likely to have been unsuitable, and could have led to their being financially disadvantaged. Royal Liver will compensate those aged 59 and over at the start of the policy or where payouts will not match the premiums paids. So far, 2,342 customers have asked for premium refunds plus interest.
The FSA said the fine was one of the largest it had issued for such a breach and suggested that without the firm's cooperation, the fine could have been far higher.
A Royal Liver spokeswoman said: "Royal Liver Assurance acknowledges and accepts the official announcement of the outcome of FSA enforcement proceedings." She said the group had also taken action to prevent any further mis-selling.
"The relevant contracts were withdrawn in the UK in 2004 and all policyholders affected have been contacted and offered a full refund of premiums plus interest at an appropriate rate. Royal Liver has worked closely with the FSA on this issue to ensure that the appropriate lessons have been learned and controls have been strengthened as a result."
With-profits policies were the bedrock of the UK life insurance industry but the equity market slump between 2000 and 2003 forced insurers to slash bonuses
Source: Miles Brignall and Tony Levene The Guardian, Tuesday April 11, 2006
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