Back in 2011 I wrote about seal culling.

Seal culling;- the practice among financial institutions of providing sub-standard products to existing customers rather than treating them fairly and ensuring they are made properly aware of alternatives.

Have you been culled? To answer that question you need to have a degree of awareness of what you’ve bought and in retrospect, the reason you bought a sub-standard product.

If you are a pensioner, you may well have bought an annuity from an insurance company. You may have bought wisely, used the Open Market Option or better still considered all the retirement income options available to you.

More likely, you didn’t and if you took the annuity offered as the default option from the insurer who ran your pension plan, you may have been that seal.

I’m not ambulance chasing here, though I hear the sirens getting closer. The more that insurers and their trade body the ABI get angry when I mention these things, the more I fear a seal cull  has occurred.

Yesterday, the FCA caught up with the Prudential (Standard Life were collared earlier in the year).

People who were mugged, clubbed and culled in the first decade of the millenium are perhaps going to get compensated for being financially mistreated by institutions that knew better and chose not to treat their customers fairly.

The man from the Pru- now happily retired?

FCA fines Prudential £23,875,000 for failures relating to non-advised annuities sales

But as Alan Hughes of Foot Ansty, points out,

Most of the ‘relevant period’ during which the breaches took place was before the Senior Insurance Managers Regime came into effect, which may be why there is no indication of action against individuals. If the same conduct were to take place now, the senior managers would perhaps be having very uncomfortable conversations with the enforcement team…

The people who we knew then were at it, are gone and it is the Pru’s shareholders who pick up the tab today. The fine is less than 10% of the estimated redress.

#Prumotivation

The Prudential was found by the FCA to have created the wrong culture within its organisation

Prior to 2013, the risks created by a lack of appropriate systems and controls were increased by sales-linked incentives for call handlers and their managers which meant that call handlers might put their own financial interests ahead of ensuring fair customer outcomes. Call handlers were incentivised by the possibility of earning an additional 37% on top of their base salary and winning prizes such as spa breaks or weekend holidays.

The Prudential still boast of their motivational skills today

A long time coming

The fine and redress should be no surprise, the Prudential knew this was coming and there was provision in this year’s accounts. The cost of restitution will not be cheap, nothing guaranteed is – except perhaps the behaviour of the seal-clubbers whose actions have sold a generation of retirees short and left annuities with a bad name.

Shame on the Prudential and shame on Standard Life who picked up a similar fine for similar practices earlier in the year. You knew what you were doing and you made anyone who pointed out your practices at the time, feel very unwelcome.

Pru were far from alone in this, they were also far from the worst as well.

They did successfully complain to the FSA about me running an advert saying smokers got better annuities from my company than the Pru by shopping around in either 2001 or 2002.

How the world changes!

— Steve Groves (@Sjg3G) September 30, 2019