"The financial incentives available to staff for selling non-advised annuities by telephone created conflicts which led to unfair outcomes for some customers."
The FCA fined Standard Life Assurance over £30 million for failures related to non-advised sales of annuities.
Its investigation found that Standard Life Assurance (SLA) failed to put in place adequate controls to monitor the quality of the calls between its call handlers and non-advised customers.
At the same time, the firm offered its front-line staff large financial incentives to sell annuities, which the FCA says encouraged them to place their own financial interests ahead of their customers.
During the period of misconduct, nearly 22% of call handlers received more than 100% of their basic salary in bonus payments.
The regulator said SLA failed to provide some customers with appropriate information about enhanced annuities, including the option to shop around for a better deal.
In 2017, SLA voluntarily agreed to conduct a past business review to identify and pay redress to those customers who were likely to have suffered, or did suffer, loss as a result of its failures. As of the 31st of May 2019, SLA had paid approximately £25.3 million to 15,302 customers.
SLA was formerly part of the Standard Life Aberdeen group of companies but was sold to Phoenix Group in August 2018.
The past business review is ongoing under the ownership of the Phoenix Group and the firm expects to complete the review by the end of 2019.
SLA did not dispute the FCA’s findings and therefore qualified for a 30% discount. Without this, the FCA would have imposed a financial penalty of £43,989,300.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Standard Life Assurance Limited's controls needed to place fairness to customers at their heart. Here, the financial incentives available to staff for selling non-advised annuities by telephone created conflicts which led to unfair outcomes for some customers.
"Firms must have controls in place to ensure they are prioritising fairness to customers."
Susan McInnes, CEO of Standard Life Assurance and Phoenix Group director, commented: “While this is an historic issue and one we were aware of when we acquired Standard Life Assurance Limited, we would like to apologise to affected customers, all of whom we have already been in contact with as part of the programme of customer redress. We have also reviewed and updated our telephone practices as part of this process.
“Whenever we get things wrong, we seek to learn from our mistakes and are absolutely focused on putting things right. Our remediation programme for affected customers is progressing well and we expect it to be completed by the end of the year.”