FCA fines Prudential £24m over non-advised annuity sales

Between July 2008 and September 2017, Prudential’s non-advised annuity business focused on selling annuities directly to existing Prudential pension holders. Firms are required to explain to customers that they may get a better rate if they shop around on the open market and Prudential was aware that many customers could get a higher income in retirement by shopping around on the open market.

The FCA's investigation found that Prudential failed to ensure that customers were consistently informed that they may get a better deal if they shopped around and "failed to take reasonable care to organise and control its affairs in breach of its obligation to ensure fair treatment of customers".

Prudential also failed to ensure that documentation used by call handlers was appropriate and failed to monitor calls with customers properly.

Prudential voluntarily agreed to conduct a past business review of non-advised annuity sales in order to identify any customers who may be entitled to redress as a result of the firm’s failures. As of 19 September 2019, Prudential has offered approximately £110 million in redress to 17,240 customers (including ongoing annuity uplifts).

Prudential did not dispute the FCA’s findings. The firm’s agreement to accept the FCA’s findings meant it qualified for a 30% discount. Were it not for this discount the FCA would have imposed a fine of £34,107,200.

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 focussed on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers."