The enforcement division of the UK’s Financial Conduct Authority is reviewing non-advised annuity sales by Standard Life Assurance, which was acquired by the Phoenix Group in August 2018.
According to the consolidator’s annual results, published on 5 March, Standard Life agreed with the FCA “to undertake a past business review”.
The purpose is to identify whether relevant customers received sufficient information about enhanced annuities to make the right decisions about their purchases; and, where appropriate, provide redress to those who have suffered loss as a result.
The FCA published its thematic review of non-advised annuity sales in October 2016. In its findings, the regulator identified concerns in a small number of firms relating to significant communications that took place orally, usually over the phone.
Not a barrier to sale
Phoenix has confirmed that this was known at the time of acquisition.
According to the results statement: “On acquisition […], obligations arising as a result of past practices […] were assessed. As a result, it was determined appropriate to recognise a provision of £225m in respect of [Standard Life Assurance] on a fair value basis in this regard.”
If the total cost surpasses £225m ($297m, €262m), however, Phoenix can recover up to £150m under a “deed of indemnity” which it secured during the acquisition and that lasts for up to four years.
Since 31 August 2018, £44m has been used.
Abbey Life
The Standard Life review follows similar action at another Phoenix acquisition, Abbey Life, relating to the treatment of long-standing customers in the life insurance sector.
The FCA’s thematic review was published in March 2016 and the investigation into Abbey Life was closed in September 2018.
