Prudential sets aside £175m for annuity sales review

In its full year results, Prudential said the provision partly attributed to a 31% fall in operating profits to £828 million.

The decline also reflects lower profit from new annuity business, down from £123 million to £41 million in 2016 as Prudential scales down its participation in the annuity market.

Last month, Prudential agreed with the FCA to review non-advised annuities sold after 1 July 2008 to its contract-based DC pension customers whose net pension pot was worth £5,000 or more.

The review will examine whether these customers were given sufficient information about the availability of, and their potential eligibility for, enhanced annuities.

It will also look at whether these customers could have potentially received a higher income from Prudential or another provider.

In its full year results, Prudential said: "The FCA’s thematic review of non-advised annuity sales practices showed that, in a portion of annuity sales that the UK business made since July 2008, it was not adequately explained to customers that they may have been eligible for an enhanced annuity. We are continuing to work to ensure we put things right."

Last month, Standard Life also made provision for redress of £175 million in respect of its own annuity sales.