Pension and life insurance company Aegon Scottish Equitable has been fined £2.8m by the Financial Services Authority (FSA) and forced to repay £60m back to investors in compensation for poor administration leading millions of pounds in losses for consumers.
For 300 issues dating back to 2002, the FSA stated that Aegon had failed to take reasonable care to organise and control its affairs responsibly and effectively, and that the company’s ineffective governance put many of its customers at risk.
What was Aegon Scottish Equitable fined for?
In May 2009, Aegon Scottish Equitable admitted to the FSA that it had failed to issue 238,000 policy documents to its customers and had misplaced the details of over 200,000 policyholders that had moved in large administrative errors. It was at this point it began a compensation programme for its customers.
Of greater concern, the firm had failed to make guaranteed minimum pension payments correctly, leading to 774 customers losing out on around £7m and incorrectly calculated a number of fund rebates on 25,000 policies leading to losses of £8.5m.
Aegon Scottish Equitable was also guilty of failing to match the Department for Work and Pensions contributions to personal pensions for approximately 2,500 customers, resulting in consumers being out of pocket to the tune of £6.7m.
What is the total consumer detriment from Aegon Scottish Equitable’s actions?
The total consumer detriment from the 300 issues identified by Aegon Scottish Equitable is estimated to be £60m. The firm is now undertaking a repayment programme to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions.
Aegon Scottish Equitable has already started to compensate consumers and will have paid £30m in redress by the end of 2010.
Margaret Cole, director of enforcement at the FSA said: ‘By letting the issues build up over such a long period [Aegon] Scottish Equitable made it even more difficult to fix the problems and this led to delays in getting compensation to customers.
‘This case shows the importance of getting customer administrative procedures right and fixing them quickly when they go wrong. This is a key part of treating customers fairly.’
What to do if you think you are affected by Aegon Scottish Equitable’s mistakes?
A spokesperson for Aegon Scottish Equitable confirmed that £30m had already been paid to 181,500 of its customers. It is now writing to and calling all remaining customers affected by problems and aims to pay the remaining £30m by the end of 2011.
For more details on what to do if you receive poor service from a company, read the free Which? guide, how to complain about financial services.
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