05 Mar 2019
Standard Life Assurance referred to FCA for investigation
Following a thematic review of non-advised annuity sales, Standard Life Assurance has been referred to the Financial Conduct Authority’s (FCA) enforcement division.
Phoenix Group acquired Standard Life Assurance in August last year, which the FCA has taken into consideration in their review, to look at past annuity sales practices and question whether non-advised customers had missed out on an enhanced annuity.
The FCA was concerned that sales processes at some organisations meant consumers were not able to make informed decisions about buying enhanced annuities.
Towards the end of last year, in October, Standard Life confirmed they were one of the providers who had been asked to conduct a review of their non-advised annuity sales.
Phoenix Group confirmed that they were aware of the review at the time they were buying the company, and remarked they did expect the costs to increase from these reviews “to be covered by the indemnities agreed”.
Chief executive at Phoenix Group, Clive Bannister, said:
“Standard Life was referred to the FCA enforcement division to consider whether any of the issues identified in the thematic review on non-advised annuities sales warranted further intervention and we continue to work with the FCA on the ongoing investigation.”
In the full year results published by Phoenix Life earlier today, they said their deal with Standard Life had included a £225 million provision to cover potential costs that would arise as a result of the FCA’s investigation.
Currently, £44 million of the £225 million provision has been used up, with £181 million remaining.
The group added:
“To the extent that total costs post 31 August 2018 exceed £225 million, such amounts will be recoverable under the deed of indemnity and related caps up to a maximum of £155 milion.”
Following the merger between Standard Life and asset manager Aberdeen in 2017, Standard Life Assurance was put up for sale.
In the £3.28 billion deal with Phoenix, Standard Life Aberdeen acquired a shareholding of just under 20% of the wider group.
In their report, Phoenix Group have also announced the appointment of Campbell Fleming and Barry O’Dwyer, from Standard Life Aberdeen, to the board.
The firm is expected to enter the FTSE 100 index on March 18, 2019.