The City watchdog has fined Prudential £23,875,000 for mis-selling its annuity products
The Financial Conduct Authority (FCA) has fined Prudential for failing to tell its customers that they may be able to get a better retirement income if they shopped around for their annuity.
The fine relates to the period between July 2008 and September 2017 when the company focused its efforts on selling annuities direct to its pension customers.
The FCA found that the firm had not complied with its obligation to inform customers that they may be able to secure a higher income from a different provider.
This should have also included guidance around whether or not customers could be eligible for an enhanced annuity which pays a higher income to individuals who smoke or have any medical problems.
The regulator also found that Prudential failed to ensure that documentation used by call handlers was appropriate. This means that customers were not always informed about their right to shop around for an annuity when they phoned the company.
Such calls were also not always monitored by Prudential.
In addition to paying the fine, Prudential is now going through the process of contacting customers who may have been affected. As of 19th September it had offered £110m in redress to 17,240 customers.
Mark Steward, executive director of enforcement and market Oversight at the FCA said: “Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly. These are very serious breaches that caused harm to those customers.
"Prudential is now rightly focused on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers.”
Pension (AVC) from Prudential
When I retired from teaching in March/April 2008 I claimed my AVC pension from Prudential. I don't remember being given any advice about shopping around or asked whether I had a serious medical complaint. I was already a diagnosed Type 2 diabetic on medication and I am now insulin dependent. Reading your article it seems as though I have not been treated fairly. I just assumed when I retired that Prudential would pay my pension savings back to me!
Reply to Susan Reid
Very similar circumstances and dates Susan - although I did actually apply for an enhanced annuity because of Type 2 Diabetes , and was categorically told it did not qualify, I was misinformed (polite way of saying "lied to").
Ten years later (they'd obviously been rumbled) they wrote to me and had changed their mind. They offered a one of payment to cover under payments, AND an increase to my annuity. I, after a lot of hassle, got the one off payment (less tax on the interest) but they've now reneged on their promise of an increase in annuity.
I'm contemplating legal action - they tend to think their actions are justified.
Prudential has treated me admirably
When I was nearing 65 I was contacted by letter by Prudential to verify my identity. I was then sent a substantial cheque as pay out from a policy my Mother took out for me as a child, paying on the doorstep "The man from he Pru". She stopped payments about 50 years before and I had no idea that this policy existed. However, their records, pre computer, were complete and they paid out my totally unexpected windfall despite my having no paperwork. Impressive, honest!
Reply to Peter Lewis.
This has nothing to do with what appears to be an endowment policy. It is about annuities.
I have never had any problems with Prudential regarding life assurance policies, which gave me the incorrect impression that the name "Prudential" was reputable and could be trusted.
How wrong I was! (The FCA tends to agree with me).
They've now reneged on promised increase in annuity,
I'm disgusted at Prudential's attempts to rectify their actions, they offered me a one off payment and a slight increase in annuity. I got the promised payment, but only after complaining that the payment received was not the amount I'd agreed to.
Another complaint was that when I had applied for an enhanced annuity I was told that Type 2 Diabetes didn't qualify, so naturally thought this was industry standard and didn't shop around for what I now consider was a mis-sold annuity. There is no denial from them that I did apply for an enhanced annuity, I didn't even consider applying for an enhanced annuity for what I considered were lesser chronic illnesses.
They have now reneged on their promise of a slight increase (just over £30 a year) in my annuity, and I've once again had to start complaining.
What is the point of the FCA fining them £24 million - I'm reasonably certain none of it is finding its way to the customers, quite naturally elderly, who have suffered stress and inconvenience caused by what I once thought was a reputable company. Most have probably given up trying and many will have died before they could get the back payments.
Prudential's pathetic attempts to correct things did not include what might reasonably have been thought to pay the tax on the interest of their under payments, trying to reclaim it over a ten year period from HMRC would be virtually impossible., to those who are not taxpayers and probably need it more.
Complete lack of communication
I received a letter from Prudential on 23 August stating I would receive a sizeable compensation payment within two weeks and my annuity would be increased by £100 per month. Since then, absolutely nothing. No payment, no increase, no communication.
I too thought Prudential was a reputable company.