Royal Liver Assurance has been fined £550,000 by the Financial Services Authority (FSA) for mis-selling with profits savings policies.
The company sold the policies as general savings vehicles to a significant number of its older customers between 1 July 1999 and 15 September 2003.
The FSA says the firm’s failings resulted in the sale of the policies to customer who had no demonstrable need for life cover or where the life cover included in the policy was not suited to their needs.
As a result, customers with a general savings need were recommended a product where there was a risk the policy could pay back less than the total value of what was paid in premiums.
Royal Liver Assurance has accepted that a significant proportion of these sales to customer aged 59 and over were likely to have been unsuitable and these sales carried a risk of causing financial disadvantages.
The FSA says the firm has co-operated fully with the enforcement action and has offered compensation to all customers aged 59 and over, and additionally to those customers of any age whose policies had been projected to pay on maturity a sum which would not exceed the total premiums paid.
It adds that after first identifying sales of these policies to older customers as a potential area of mis-selling, the firm has taken prompt action to introduce enhanced procedures for the ongoing sales of these products to prevent any further such mis-selling.
Without this level of co-operation, the regulator says it would have been minded to levy a much higher financial penalty.
Margaret Cole, the FSA’s director of enforcement, says: “This was a serious case of mis-selling, particularly as a significant number of Royal Liver Assurance’s customers were nearing retirement age and did not need the cover they were sold. The failings were systemic and arose from weaknesses in the firm’s sales and compliance processes and persisted over a long period of time.”
She adds: “Firms must make sure that they take account of all products which may be suitable when making a recommendation.”
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