The UK's Financial Conduct Authority has imposed a financial penalty of £23,875,000 on the Prudential Assurance Company for contravening Principles 3 (on management and control) and 6 (on customers’ interests) of its Principles for Businesses in relation to non-advised sales of annuities to existing customers who were approaching retirement. Redress payments of £250 million are likely.

The period of transgression was a long one - between July 2008 and 30 September 2017 - and in it the firm targeted "existing customers who were approaching retirement and who may have been eligible for an enhanced annuity, or may have been eligible for a better rate on the open market for either a standard or enhanced annuity."

The FCA asserts that by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems, the Prudential failed to pay due regard to the interests of its customers and did not treat them fairly.

Prudential failed to: (i) keep documents of the activities of its call handlers to ensure that it gave customers the right information: (ii) monitor calls properly; (iii) do enough to stop its financial interests (and those of its call handlers) from coming before fair results for customers; and (iv) deal with problems that emerged from its monitoring of calls.

The FCA expects the total redress payable to the entire population of customers will amount to some £250 million. This figure covers back-payments and interest paid to affected customers to put them in the position that they would have occupied had they bought enhanced annuities (with higher rates than the ones they actually purchased) on the open market at the point of retirement.