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Prudential fined £23.9m for mis-selling retirement products

by ace
Prudential is listed and has its headquarters in London

Insurance giant Prudential has been fined £ 23.9 million by the city regulator for selling retirement income products to its pension clients.

The Financial Conduct Authority (FCA) said the company should have advised clients to get a better deal by buying annuities in the open market.

But the FCA found a lack of control to ensure that this happened and that employees received bonuses and incentives, including spa breaks and absent weekends to sell Prudential products.

Prudential has already agreed to review previous annuity sales – and as of this month has offered £ 110 million in compensation to more than 17,000 customers.

The FCA said the company has contacted the vast majority of affected customers.

Mark Steward, the agency's chief executive officer for market surveillance and oversight, said: "Prudential has failed to treat some of its customers, who could have gotten a better deal in the open market fairly.

"These are very serious breaches that have caused damage to these customers.

"Today's financial penalty reinforces the fundamental obligation of fairness that companies owe to customers."

An annuity is a product that pays a regular retirement income. Clients buy annuities using life-saving pension funds.

The FCA emphasized that customers demand accurate information when choosing an annuity because it is a complex financial product that can affect the customer for life.

Those who have a shortened life expectancy, for example, may be eligible to purchase an improved annuity.

FCA's fine focused on selling Prudential annuities directly to existing pension pot customers with whom it contacted to discuss retirement options between July 2008 and September 2017.

He said the company "failed to ensure that customers were constantly informed that they could get a better deal if they bought it."

The FCA also said there was a failure to ensure that the documentation used by call handlers was appropriate and a failure to monitor their calls.

In addition, prior to 2013, there were sales-related incentives for call handlers and their managers, including bonuses of up to 37% of salary, as well as prizes.

Rival company Standard Life was fined £ 30.8 million in July for similar failures.

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