Prudential, the UK's largest insurance company, yesterday escaped discipline over bad pension transfer advice to its clients.
The decision by Lautro, the former life company watchdog, ends an 18- month investigation into Prudential's activities.
Lautro's decision to step in followed complaints that Prudential's clients were being asked to sign forms stating that no advice had been given in relation to their pension transfer decision.
But some industry observers claimed privately that the investigation owed more to the abrasive relationship of Mick Newmarch, its former chief executive, with City regulators. He had steadfastly denied that his company was involved in any mis-selling scandal. Prudential yesterday publicly "acknowledged" Lautro's concerns.
Mr Newmarch resigned at the beginning of this year in the wake of a separate Stock Exchange inquiry over whether he used insider knowledge in order to exercise share options worth more than pounds 100,000. He was cleared of any offence.
Lautro's investigation was triggered in April last year on an informal basis after complaints that Prudential's 80,000 pension transfer clients had signed forms absolving its sales representatives of responsibility for any decisions made.
Prudential rejected all criticisms of its activities, claiming that its compliance procedures were so strict that more than half of all pension transfer applicants were rejected as unsuitable.
It even spent pounds 250,000 on a publicity campaign denying that it was one of the companies affected by the scandal in which up to 1.5 million people were wrongly advised to start up personal pensions or transfer funds from company schemes into them.
Despite its protestations, the inquiry became formal in March, when the regulator's monitoring committee told the company it was worried about some of its sales activities. In the wake of Prudential's response it was decided not to go ahead with disciplinary action.
Lautro said: "As a result of [our] investigation, Lautro has expressed concerns to Prudential regarding certain aspects of its approach.
"[This was] in the light of Prudential's policy that transfer sales by Prudential's representatives should be given out without giving clients advice in favour of transfer.
"Prudential is carrying out a review of all its pension transfer business in line with guidelines set out by the Securities and Investments Board for pension transfer reviews generally. Prudential has acknowledged Lautro's concerns. It responded by confirming that it would carry out the review and that it no longer operated the [previous] policy."
The watchdog added that now the investigation was over, Prudential would finally be allowed to leave Lautro to become regulated by the SIB, as it applied to do 18 months ago.
Under Mr Newmarch, Prudential argued in 1992 that it was not in favour of the new watchdog, the Personal Investment Authority, then being set up and would rather join the SIB instead.
Prudential welcomed Lautro's statement yesterday. A spokesman said: "We are pleased that the decision has been taken. We had given our response to a version of the report prepared at the end of last year. We have not changed our stance about being regulated by the SIB and are quite comfortable in belonging to it."Reuse content