Standard Life referred to FCA enforcement over non-advised annuities

Hannah Godfrey reports...

Standard Life has been referred to the Financial Conduct Authority (FCA) enforcement division over issues identified around its non-advised annuity sales.

Standard Life, which was acquired by Phoenix Group in a multi-billion pound deal last year, was referred to the FCA’s enforcement arm because of issues identified in the regulator’s thematic review on non-advised annuity sales.

Phoenix’s annual results, published on Tuesday (5 March), said: “Standard Life was referred to the FCA enforcement division to consider whether any of the issues identified in the thematic review on non-advised annuities sales warranted further intervention and we continue to work with the FCA on the ongoing investigation.”

Phoenix said the review was a known issue when it acquired Standard Life and that it expected the costs arising from the review to be covered by indemnities agreed at the time of the acquisition. It said it would continue to work with the FCA on the issue.

Thematic review

The FCA’s review looked at whether firms provided customers with sufficient information about enhanced annuities, whether firms made customers aware of their potential eligibility for enhanced annuities, and whether firms encouraged them to shop around to potentially get a higher income from another provider.

The regulator published its findings in October 2016, saying it had found no evidence of an industry-wide failure to provide customers with sufficient information about enhanced annuities through non-advised sales.

The FCA’s concerns, however, were born out of sales from a “small number” of firms where communications took place orally, usually over the phone, which were likely to have resulted in some customers purchasing a standard annuity when they were eligible for an enhanced product.

The review assessed more than 1,200 non-advised sales at seven different firms, one of which was Standard Life. Between the seven firms, the sales accounted for about two-thirds of the whole annuity market.

In a statement given at the time of the review, Standard Life said: “At the request of the FCA, Standard Life will conduct a review of all non-advised annuity sales from July 2008 to identify whether our customers received sufficient information about enhanced annuities to make the right decisions about their purchase.

“It is not yet possible to determine a reliable estimate of the quantum of any redress associated with this process.”