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Scottish Equitable to compensate customers £60m

Scottish Equitable to compensate customers £60m

Category: Money

Updated: 16/12/2010
First Published: 16/12/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Thousands of Scottish Equitable pension policyholders are to be compensated for errors made during its administrative processes.

Redress payments are expected to total around £60 million, with £30 million having to be paid by the end of 2010.

The Financial Services Authority (FSA) has also fined the insurer £2.8 million for causing 'significant consumer detriment through poor administrative procedures'.

The action comes after Scottish Equitable informed the regulator last year that it had identified around 300 issues relating to problems in administering its policies.

These problems included not issuing around 238,000 policyholder documents, incorrectly calculating guaranteed minimum pension payments and future benefits of 774 customers, and failing to identify errors in calculating rebates to charges on pension policies for 25,000 policies.

Other issues included not matching Department of Work and Pensions contributions to personal pensions for around 2,500 customers, and failing to trace around 200,000 policyholders who had moved without informing the insurer of their new address.

The company has already started to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions.

"The redress package is significant news for the customers of Scottish Equitable and I am pleased that £30 million will already have been paid back by the end of the month," said Margaret Cole, FSA managing director of enforcement and financial crime.

"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. By letting the issues build up over such a long period Scottish Equitable made it even more difficult to fix the problems and this led to delays in getting compensation to customers."

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