Cannon Lincoln failed to ensure that clients of its Cardiff branch were not being 'churned' - advised to surrender an existing policy and take out a new one unnecessarily.
Lautro, the life insurance regulator, said the Cardiff sales staff advised investors to cancel investment contracts 'without having verified that such a course of action was bona fide in the best interests of those investors'.
Cannon admitted failing to monitor properly the sales staff at either its Cardiff branch or one of its firms of tied agents. The tied agent employed sales staff without making adequate checks. Lautro said that 'investors were in danger of being sold inappropriate investment products or of cancelling investment contracts when not in their best interests to do so'.
The case underlines life offices' failure to control their tied agents adequately. Earlier this week it emerged that Lautro ordered Scottish Widows, a leading company, to write to more than 20,000 policy-holders because of concerns that the firms of tied agents that advised them did so without adequate information. Lautro has also penalised Norwich Union and other offices over problems with tied agents.
Cannon said the management of its Cardiff branch had been replaced and the tied agent was no longer working in the industry.Reuse content