Lautro warns of tougher penalties

LIFE insurance and unit trust companies that break the investor protection rules will face much higher fines in future, their regulator warned yesterday, writes Paul Durman.

Lautro intends to take a much tougher line with companies whose inadequate procedures pose a serious risk to their customers. The maximum fine so far was the pounds 180,000 penalty imposed this week on Legal & General - a trivial sum for such a large life insurer.

Lautro is reaching the end of the disciplinary action taken after its first round of inspection visits. Failings uncovered during the second round, which began last year, will be punished more severely.

Kit Jebens, Lautro's chief executive, said: 'All of our members have already received in-depth inspection visits and we have issued huge amounts of guidance. There can be little excuse for failures to come up to standard.'

The failure rate has fallen from one in three companies to one in six. 'It is still not good enough,' Lautro's Adrian Walsh said.

The first companies to be penalised more heavily will be named soon.