Standard Life could be facing up to £125m in redress after the Financial Conduct Authority (FCA) requested the firm review all its non-advised annuity sales dating back to 2008, according to investment banking group Jefferies.
On Friday, the regulator published a report in which it concluded there was no "systematic failure" in non-advised annuity sales following its review into 1,200 non-advised sales at seven different firms.
Despite its conclusion there was no industry-wide failure to provide customers with sufficient information about enhanced annuities through non-advised sales, however, the regulator has ordered a "small number" of firms to review their last eight years of non-advised sales and to provide redress where appropriate.
Yesterday, Standard Life revealed it was one of those firms and, in a subsequent analyst note, The Herald reports, Jefferies has suggested it could cost the firm up to £125m in redress payments.
The £125m figure takes into account FCA estimates that customers who should have been sold an enhanced annuity are owed between £120 and £240 a year in additional payments. The estimates also take into account the cost of purchasing additional cover in the current market.
Jefferies equity analyst Anasuya Iyer said: "Standard Life sold around 150,000 annuity policies over the July 2008 to April 2015 period worth £2.4bn of annuities, nearly all of which are non-advised sales."
Although Prudential has not confirmed it is one of the firms to be reviewing its non-advised sales, Iyer also speculated on a similar basis the firm could be liable for around £200m in light of the FCA's report if it is requested to review its sales.
She added: "Over the period [Prudential] sold around £8.6bn worth of UK annuities, where around 55 to 60% were non-advised, non-guaranteed on our estimate, equating to roughly 160,000 customers."
A spokesperson for Standard Life said it does not comment on specific estimates and added it was not yet possible for the firm to quantify the amount of redress.
A spokesman for Prudential said: "We never comment on regulatory processes."
Aim must be preservation of capital
Targeting £10,000 for ATLAS Foundation
Unwinding EU membership is unprecedented
Highlights of group's 2017 Analyst Survey
Takes immediate effect