Third party administrator fined £525,000 for customer document failings
FSA/PN/032/2008
9 April 2008
The Financial Services Authority (FSA) has fined third party administration firm Liberata Financial Services Limited (Liberata) £525,000 for failures in its systems and controls for producing and issuing documents to life and pensions policyholders.
Liberata's failings meant that there was an unacceptable risk that any of the 1.3 million policyholders whose policies it administered would not receive important financial information to help with their investment decisions and, consequently, could suffer financial loss. The failings resulted in 30,000 policyholders not receiving information, of whom 161 suffered financial loss amounting to £17,584.
The FSA determined that the firm acted recklessly in failing to heed warnings in its management information that documents were not being produced.
Margaret Cole, Director of Enforcement, FSA, said:
"The failings by Liberata were particularly serious because they put policyholders at risk of not receiving important information about their savings and pensions products. This resulted in customers not being treated fairly.
"The fine we have imposed on Liberata acts as a clear signal to firms to ensure that there are appropriate systems and controls around processes and, where there are problems, that such problems are identified and resolved swiftly. Firms which fail to do this should be in no doubt that they run the risk of enforcement action."
The firm has made changes to its senior management and appointed external consultants to help review its document production system, identify the documentation which had not been produced, analyse the potential impact on policyholders and ensure that all appropriate documents have now been provided to policyholders. The firm also ensured that all policyholders who suffered financial loss were promptly compensated.
Liberata agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount of the fine. Without the discount the fine would have been £750,000.
Notes for editors
- The Final Notice is available on the FSA website. This includes the background to the case, the relevant statutory provisions and the regulatory requirements contravened and the factors taken into account when settling the level of the fine.
- Liberata is a third party administrator which provides services to authorised firms in the life and pensions sectors. It offers a range of services including policy and customer services administration, investment fund administration and unit pricing, finance and statutory reporting and valuations. It has been authorised by the FSA since 6 January 2005 with permission for arranging deals in investments and making arrangements with a view to transactions in investments. In addition, from 14 January 2005, Liberata has had permission for assisting in the administration and performance of contracts of insurance.
- 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.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.