Royal & SunAlliance has been hit with yet another fine this morning worth £950,000, this time for en...
Royal & SunAlliance has been hit with yet another fine this morning worth £950,000, this time for endowment mis-selling between 1997 and 1999.
R&SA sold around 35,000 mortgage endowment policies during this period, says the Financial Services Authority, but mis-selling and deficiencies in its sales systems and control functions between January 1997 and July 1999 have forced the life insurer to set aside £11m for redress, along with the 2,000 short-term contract policies which have been reviewed and offered redress worth £5.6m.
In particular, the FSA says R&SA advisers failed to recommend mortgage endowments only to customers who were prepared to take the risk that their mortgage might not be repaid at the end of the term as well as "serious flaws" in its procedures.
Problems with endowment mis-selling were discovered in July 2001 when the FSA visited R&SA and found around 20% of policies sold may have been unsuitable for consumers, so all cases sold between 29th April 1988 and January 2000 are now being reviewed.
This follows previous fines for Royal Life Insurance, Sun Alliance Life, RSA Linked Insurances and R&SA Life & Pensions now totaling £1.6m between 1998 and 2002.
Carol Sergeant, Managing Director for Regulatory Processes and Risk at the FSA, said:
"This further action on mortgage endowment mis-selling should leave mis-selling firms in no doubt of our commitment to tackle those firms who make unsuitable recommendations to their customers, and to secure compensation for those who have lost out as a result.
"We place great emphasis on the importance of adequate sales systems. It is the firms responsibility to ensure these systems are in place. The serious nature of R&SA's failings, and the size and nature of the firm meant a significant number of its customers have been exposed to actual or potential loss."
Some of R&SA's problems were mitigated by the fact that between 1994 and 1997 R&SA warned a significant number of its policyholders that policies might not provide sufficient funds at maturity to pay off the mortgage and has proactively identified problems relating to selling of short-term endowment contracts.
15% increase in number of claims paid
Open architecture philosophy
Inflation above 2% for first this this year
Focus on customer centricity
To repay £900,000 to customers