The Guardian reports that the regulator said the firm was guilty of “serious systems and controls failings” that resulted in investors receiving marketing material suggesting its Pension Sterling Fund was a low-risk cash fund appropriate for people who were approaching retirement. Last January it was discovered that only 12% of the fund was held in cash and a substantial amount was invested in toxic mortgages, and that the falling housing market and rising bad debts had reduced its value by 4.8%, according to the news report.
The FSA said that between July 10, 2006, and February 28, 2009, the insurer failed to ensure there were proper systems and controls over the fund, specifically in relation to the marketing material produced. It said the marketing material was “not clear, fair and was misleading”, and had wrongly claimed it was wholly invested in cash.
In a statement Standard Life said it had “learned important lessons from this mistake,” according to the Guardian. The company said that when an internal review identified problems with some of its marketing material last February, it immediately apologized to customers.
The news report said about 98,000 investors faced losing money, until Standard Life paid in £102.7 million to restore their losses.
“Since then, we have conducted a full and thorough review of existing literature and put in place a new improved process for new literature,” Standard Life said, adding that it has worked closely with and cooperated with the FSA throughout its investigation.