Prudential has been forced to pick up a £750,000 fine from the FSA for mortgage endowment mis-sellin...
Prudential has been forced to pick up a £750,000 fine from the FSA for mortgage endowment mis-selling at its Scottish Amicable division, as well as the discovery of other faults with the ScotAm sales system between January and December 2000.
Scottish Amicable ended up having to employ an independent accountants firm to review a sample of endowment cases after a visit by the FSA in January 2001 discovered clients were missold because they were not sufficiently prepared by sales teams to take the risk should the endowment not meet mortgage repayments at the end of the term.
Around £11m is being set aside to cover compensation payments as 33,781 cases were eventually reviewed from between January 1999 and February 2001.
However, there could yet be more cases to emerge as ScotAm has also agreed to pay redress to policyholders who bought endowments through appointed representatives between 29th April 1988 and 31 December 1998.
This is the second such major fine for mortgage endowment mis-selling in recent months, following the fine handed down to Scottish Widows.
One of the key complaints from the FSA about Scottish Amicable's handling on mortgage endowments is not just the mis-selling that occurred but the fact that guidance on the sale of endowments had recently been issued through RU72 but not followed.
However, the fine would have been "substantially higher" for Scottish Amicable had it not been for Prudential, its parent group, whose management acted quickly on discovering problems.
Prudential closed ScotAm to new mortgage endowment business, integrating ScotAm into Pru's compliance structure as well as getting rid of its appointed reps sales team as soon as problems were discovered.
Two global vehicles
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Must appoint separate CEOs and boards
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Will report to Mark Till