Royal London Mutual Insurance Society Limited (Royal London) has been ordered to shell out just over £15.4m by the UK's Financial Services Authority (FSA) for breaching rules related to the sale of its investment products.
The firm must pay £15m in compensation to about 65,000 customers, and has been fined a further £400,000 by the FSA. The firm was also ordered to cover costs for the Personal Investment Authority (PIA) totalling £20,370.
The review covered the period from April 1996 to February 1999. Peter Bibby, head of PIA Regulatory Enforcement at the FSA said: “Customers place their trust in the advice that firms give them.
“Where we find that the advice is not backed by adequate compliance and sales procedures, we will ensure that those sales are reviewed and customers receive the proper redress where appropriate.“
PIA investigations found that the firm had not always provided suitable advice to customers; had failed to keep sufficient customer records; and that customers had not received explanations as to why a particular product had been recommended.
They also discovered that in relation to organisation and control of its internal affairs, Royal London had not maintained an adequate system of compliance control; had failed to monitor the conduct of sales staff; and did not have an adequate system to train and assess advisers and supervisors.
Since the identification of these failures by a PIA visit in January 1999, Royal London is carrying out a review of past sales of products across its full product range, including endowments, life policies and savings plans.
*Since the beginning of the year, the FSA has taken disciplinary action against 44 firms, resulting in fines totalling £1,457,000.
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