Standard Life has been fined £2.45m by the FSA for ‘serious systems and controls failures’ in relation to its Pension Sterling Fund, and says the fine signals its intention to crack down on regulatory breaches.
The FSA found between 10 July 2006 and 28 February 2009 Standard Life produced marketing material which led investors to believe the fund was fully invested in cash when in fact it was largely being invested in floating rate notes by July 2007.
Standard Life’s misleading marketing material put investors at risk of unexpected capital losses being incurred, said the FSA, and it was a shock 5% (approximately £100m) decrease in the fund’s value in January 2009 which first drew attention from the regulator.
In addition, the FSA found there had been a lack of prompt and full investigation of concerns about the marketing material by Standard Life.
While announcing the fine, the regulator acknowledged Standard Life was proactive in seeking to compensate investors for its failings. This included its £102.7m investment into the fund following its fall in value, and contacting investors identified as having received poor quality marketing material to determine whether any further compensation may be required.
In addition, Standard Life commissioned a report by an independent third party into the marketing material issued and how to improve the systems and controls related to the fund.
Margaret Cole, FSA director of enforcement and financial crime, said: “The FSA takes the issue of misleading financial promotions very seriously and the fine announced today demonstrates our commitment to the principle of credible deterrence.
“It is critical consumers are given an accurate understanding of the nature of investment products and the risks involved. Without this information, consumers are unable to make informed decisions about whether investments are suitable for their individual investment strategy.
“Throughout 2010 and beyond, the FSA will continue to take strong action when a firm’s financial promotions fall short of the requirement to be ‘clear, fair and not misleading’ and customers have not been treated fairly.”
