PIA gives record pounds 525,000 mis-selling fine to Britannic

BRITANNIC Assurance was yesterday given a withering public reprimand and a record fine of pounds 525,000 over failures in compensating investors who lost thousands of pounds each because of pension mis-selling. The Personal Investment Authority also billed it for legal costs of pounds 125,000 after it battled for a year to persuade the insurer to rectify fundamental failings in its efforts to compensate victims of mis-selling.

Britannic, a home-service insurer which collects premiums door-to-door, failed even to send vital questionnaires to possible mis-selling victims on time. They were supposed to have been sent, returned and dealt with by 31 December 1996. Despite knowing of the regulator's concern, Britannic failed properly to chase policyholders for replies. Its reminders were "incomplete and ad hoc", the regulator said.

By the time the PIA visited the company in January 1997, two years after it was asked to look at the scandal, Britannic had not identified which policyholders needed urgent attention. The PIA said its fundamental failures were affected by weak planning. It had also dedicated inadequate resources to the review of pensions mis-selling.

Britannic "failed to take all reasonable steps to carry out its review of past pension transfer and opt-out business" along the lines demanded by regulators. The company said it was apologising to policyholders; it would compensate 14,500 investors with urgent cases by the end of June at the latest.

Brian Shaw, Britannic's chief executive, said: "Wherever it is appropriate we do apologise. In dealing with customers we are indeed apologetic for what has happened. We recognise that the whole credibility of our business is to provide policyholders with the highest standards of service. We do acknowledge that in the period prior to January 1997 we did not have everything in place and we did not carry out the review in accordance with the PIA's standards." Asked why there were inadequacies in the level of resources devoted to the mis-selling review, Mr Shaw said: "We have always held this as a high priority. The extent to which we can actually allocate resources depends on the rate of progress being made."

In mitigation, the PIA admitted Britannic had believed it would be appropriate to focus on cases where it was most likely redress would be due.

But this was not what the PIA had demanded. The fine is a joint record, matched only by that given to London & Manchester, a rival home-service company, reinforcing the impression that door-to-door insurers were the worst culprits in the mis-selling scandal.