The Prudential, the UK's largest pensions provider, has missed its third pensions review target this year. Its regulator, the Financial Services Authority (FSA), wanted it to complete all 31,000 of its top-priority pensions mis-selling cases by the end of last month. But yesterday, the company said that difficulties in obtaining data meant it had completed only 91 per cent of cases. "With hindsight, we underestimated the complexity of the exercise", said John Elbourne, managing director of Prudential Assurance.
However, last weekend, the Pru sent out pounds 7.4m in cheques to the 3,000 people whose cases the company has been unable to complete. Families of customers who have died during the review will each receive pounds 10,000. Those who have retired will receive pounds 2,500.
Mr Elbourne was keen to stress yesterday that the advance payments had "no strings attached". Customers who cash in their cheques are not obliged to accept the Pru's final offer. Nor will customers have to repay the Pru if the final offer falls short of the advance payment.
In recent months, the Pru has been subjected to stinging criticism from both Helen Liddell, the Economic Secretary to the Treasury, and the FSA (then known as the Securities Investment Board) for dragging its feet in the pensions mis-selling review.
The company missed regulatory deadlines in both June and September, prompting the FSA to declare in October that the Pru had failed to act with "due skill, care and diligence". Following this "naming and shaming", Sir Peter Davis, the Pru's chief executive, publicly apologised to the victims of mis-selling. Speaking on BBC2's The Money Programme, he said: "We're very sorry about those who have been hurt and we're doing everything we can to try and deal with the issues".
The Pru's advance payments are not substitutes for full recompense for pensions mis-selling, as emphasised by both the FSA and the Treasury yesterday. A spokesperson for the FSA said: "Measures that are beneficial to investors are always welcome, but this does not mean that the cases are complete". A spokesperson for the Treasury agreed, saying: "We welcome it [the advance payment initiative] as an earnest of good faith, but it is not a proper substitute for a prompt, full and fair settlement".
Mr Elbourne said yesterday that the Pru had been unable to meet last month's regulatory target because customers had failed to return information essential to the review. The Pru hopes that the weekend's advance payments will prompt customers to provide the data the company needs. Mr Elbourne added that the Pru has received 500 calls to a special pensions helpline since the cheques were despatched.
The Pru's next deadline is the end of December, by which time it is required to complete 90 per cent of lower priority, so-called "Priority Two and Three", cases.Reuse content