The Financial Services Authority of UK has fined third party administration firm Liberata Financial Services GBP525,000 for failures in its systems and controls for producing and issuing documents to policyholders.
Liberata’s failings meant that there was an unacceptable risk that any of the 1.3 million policyholders whose policies it administered would not receive important financial information to help with their investment decisions and, consequently, could suffer financial loss.
The failings resulted in 30,000 policyholders not receiving information, of whom 161 suffered financial loss amounting to GBP17,584.
The Financial Services Authority (FSA) determined that the firm acted recklessly in failing to heed warnings in its management information that documents were not being produced.
The firm has made changes to its senior management and appointed external consultants to help review its document production system, identify the documentation which had not been produced, analyze the potential impact on policyholders and ensure that all appropriate documents have now been provided to policyholders.
The firm has also ensured that all policyholders who suffered financial loss were promptly compensated.
Liberata agreed to settle at an early stage of the FSA’s investigation and therefore qualified for a 30% discount of the fine. Without the discount the fine would have been GBP750,000.