The City watchdog has fined Prudential £23,875,000 for mis-selling its annuity products
The Financial Conduct Authority (FCA) has fined Prudential for failing to tell its customers that they may be able to get a better retirement income if they shopped around for their annuity.
The fine relates to the period between July 2008 and September 2017 when the company focused its efforts on selling annuities direct to its pension customers.
The FCA found that the firm had not complied with its obligation to inform customers that they may be able to secure a higher income from a different provider.
This should have also included guidance around whether or not customers could be eligible for an enhanced annuity which pays a higher income to individuals who smoke or have any medical problems.
The regulator also found that Prudential failed to ensure that documentation used by call handlers was appropriate. This means that customers were not always informed about their right to shop around for an annuity when they phoned the company.
Such calls were also not always monitored by Prudential.
In addition to paying the fine, Prudential is now going through the process of contacting customers who may have been affected. As of 19th September it had offered £110m in redress to 17,240 customers.
Mark Steward, executive director of enforcement and market Oversight at the FCA said: “Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly. These are very serious breaches that caused harm to those customers.
"Prudential is now rightly focused on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers.”
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