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Margaret Cole

Firms must make sure that they take account of all products which may be suitable when making a recommendation.

FSA/PN/035/2006
10 April 2006

The Financial Services Authority (FSA) has fined Royal Liver Assurance Limited (RLA) £550,000 for mis-selling with-profits savings policies. The company sold the policies as general savings vehicles to significant numbers of its older customers between 1 July 1999 and 15 September 2003.

The firm's failings resulted in the sale of the policies to customers who had no demonstrable need for life cover or where the life cover included in the policy was not suited to their needs. As a result, customers with a general savings need were recommended a product where there was a risk that the policy could pay back less than the total value of what was paid in premiums.

RLA accepted that a significant proportion of these sales to customers aged 59 and over were likely to have been unsuitable and these sales carried a risk of causing financial disadvantage.

Margaret Cole, the FSA's Director of Enforcement, said:

"This was a serious case of mis-selling, particularly as a significant number of Royal Liver Assurance's customers were nearing retirement age and did not need the cover they were sold. The failings were systemic and arose from weaknesses in the firm's sales and compliance processes and persisted over a long period of time. Firms must make sure that they take account of all products which may be suitable when making a recommendation."

The firm co-operated fully with the enforcement action and has offered compensation to all customers aged 59 and over, and additionally to those customers of any age whose policies had been projected to pay, on maturity, a sum which would not exceed the total premiums paid. After first identifying sales of these policies to older customers as a potential area of mis-selling, the firm took prompt action to introduce enhanced procedures for the ongoing sales of these products to help prevent any further such mis-selling.

Without this level of co-operation the regulator would have been minded to levy a much higher financial penalty.

Notes to editors

1. The full text of the Final Notice issued by the FSA, includes the background to the case, the relevant statutory provisions, regulatory requirements contravened, and the factors taken into account when setting the level of the fine.
2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
3. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve our business capability and effectiveness.