BusinessCompany NewsMassive fine for weak controls at R&SA

Massive fine for weak controls at R&SA

The Financial Services Authority says the £1.35m fine imposed on life insurance group Royal & Sun Alliance was because of 'systemic weaknesses' in the internal controls processes of certain companies in the group.

Link: FSA begins task of rebuilding the profession

The lack of senior management control of the pension review process would have resulted in 13,500 investors not being reimbursed £32m, had the breaches not been spotted by the Personal Investment Authority – predecessor to the FSA – the watchdog said.

Carol Seargeant, managing director for regulatory processes and risk at the FSA said the fine reflected the serious nature of R&SA’s past failings in handling its pension review and said it was the responsibility of senior management to redress consumers in a timely and effective manner.

She added that senior management should ensure ‘proper control and monitoring of such work’.

The FSA admitted R&SA had taken steps to remedy weaknesses in management control and the monitoring of the review, but said past breaches and failings were particularly serious, and had occurred after a £225,000 fine was imposed in 1997.

Duncan Boyle, Royal & SunAlliance’s UK chief executive, said the fine related to certain past issues, which the company very much regretted.

‘Once the process problems were uncovered in 2000, we took urgent action including allocating substantial additional resources to ensure the issues raised were resolved,’ he added.

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