Lautro, the life insurance regulator, also ordered L&G to pay costs of pounds 220,000. The offences, 'serious breaches of Lautro rules', took place in 1991 and 1992.
L&G's chief executive until September 1991 was Joe Palmer, who as head of the new Personal Investment Authority is charged with eliminating poor standards within the life insurance industry.
The life office admitted failing to monitor and control its sales staff of more than 2,000, and not identifying and correcting problems. Sloppy book-keeping meant cash receipts could not be reconciled with paying-in books. It also lacked any adequate arrangements to monitor high incidences of policy cancellations, which Lautro regards as a sign of bad advice.
Despite the problems, L&G is confident no clients' money was in jeopardy and it has not identified any instances of mis-selling. David Prosser, chief executive, said: 'Should any investors' losses arising from these rule breaches come to light, we will make appropriate restitution.' L&G blamed its problems on a bungled attempt to decentralise compliance procedures.
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