Prudential fined pounds 75,000 for problems with PEP schemes

Imro, the investment regulator, has reprimanded and handed out a pounds 75,000 fine to Prudential, the UK's largest insurance company, for breaching rules over the administation of some personal equity plans.

Prudential has also paid pounds 25,000 in compensation to 6,000 disadvantaged customers, which amounts to less than pounds 5 each. However, the final bill will rise as Imro's disciplinary tribunal has ordered Prudential to pay investigation and tribunal costs which have yet to be set.

The company is the first to be reprimanded and fined for problems with PEP schemes.

Imro said Prudential Personal Equity Plans had admitted that it failed to carry out reconciliations and corrections of PEP client money accounts, failed to notify Imro that these had not been done and failed to have adequate compliance arrangements in place.

The problematic PEPs were self-select and single-company products. Prudential stopped marketing these products in 1993 after realising they were difficult to administer. Prudential continues to market a unit trust PEP.

A spokesman for Prudential said: "Imro's fine of pounds 75,000 on Prudential Personal Equity Plans related to problems with reconciliation of PEP client bank accounts prior to 1994.

"When they came to light, remedial action was taken and no customers were disadvantaged. Procedures were put in place to ensure these problems will not occur again. These problems were administrative, involving delays in crediting interest to customers' accounts."

The rules that were broken concerned provisions to ensure companies held the correct amount of money for clients and were aware of the individual sums of money held for each client at all times.

Prudential faced six charges, including the failure between July and November 1993 to make up a deficit in its self-select PEP client money accounts.