UK Financial Services Authority (FSA) has penalized Sun Life Assurance Company of Canada (UK) (SLOC UK) £600,000 for poor management of its £1.2bn with-profits business.
The market watchdog claimed that the design and operation of SLOC UK’s management arrangements were vague and inadequate, resulting in a risk of improper protection of policyholders’ interests.
During the implementation of two transactions in 2008 and 2009, the firm’s poor governance, deficient review and approval process were exposed that led in one of its with-profits funds, having nearly 114,000 policies and £1.2bn in assets, being affected.
FSA director of Enforcement Tracey McDermott said that the firm’s with-profits committee and board, who had primary responsibility for the fair treatment of policyholders, were not adequately consulted on the two significant deals.
"It is essential that insurers operating with-profits funds ensure policyholders are properly protected. Independent judgement must be properly applied to issues that affect the interests of policyholders," McDermott added.
"This was an unacceptable approach to protecting policyholders."
The regulatory body would have imposed a fine of £750,000, but SLOC UK qualified for a 20% discount as it agreed to settle the charges at the earliest.