FSA fines Standard Life over Pension Sterling Fund

by Gill Montia

Story link: FSA fines Standard Life over Pension Sterling Fund

The Financial Services Authority (FSA) has fined Standard Life Assurance Limited £2.45 million for serious systems and controls failings that resulted in the production of misleading marketing material for its Pension Sterling Fund (PSF).

The regulator found that between 10th July 2006 and 28th February 2009, the life and pension provider made errors that resulted in a risk of unexpected capital losses being incurred for investors in the fund.

In addition, there had been a lack of prompt and full investigation of concerns that arose about that marketing material.

Despite the majority of the PSF being invested in Floating Rate Notes by July 2007, marketing material issued by the company referred to the fund as being wholly invested in cash.

Savers were therefore misled as to the true nature of their investments, and as the fund was intended primarily for the investment of pensions, the FSA considered it inappropriate for individuals approaching retirement.

In January of 2009, Standard Life reported that the £2.4 billion PSF had lost just under 5% of its value, or around £1,237 per investor.

The loss pertained to mortgage-backed securities and investors were furious, claiming that they were not aware that the fund held asset-backed securities in addition to deposits in banks and building societies.

However, the company has since restored the value of the fund with a £100 million injection of cash.