Pru's good image tarnished by pension record

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The Independent Online
Remember those claims by Mick Newmarch, the former chief executive of the Pru, that his company had a negligible number of pensions mis-selling cases? The leaked Personal Investment Authority statistics we publish today demonstrate unequivocally that the Pru has more suspected cases of mis-selling than anybody else.

The Pru is the biggest company in the life insurance industry, so it is perhaps not too surprising that it is at the top of the table. But what really leaps out from the figures is that of 41,439 priority cases which the Pru must assess to see whether compensation is due, the job has been completed for only 10. Proportionately, the Pru is not the worst offender, an honour that seems to go to Hogg Robinson, which has processed just one case. Nonetheless, for a company that prides itself on its good name and reputation, this is a quite disgraceful and shocking state of affairs. Having denied the problem in the first place, it is now being unacceptably slow in dealing with the problem.

The bigger scandal revealed by the statistics is the abysmal record of the industry as a whole. The documents list a wide variety of reasons for this shambles, including the reluctance of occupational pension schemes to disclose the information on which compensation claims are assessed. There is even a new regulatory jargon to describe the difficulties, such as the "response rates roadblock", which refers to the fact that too many of the affected customers are failing to respond to questions from their insurers.

The PIA is plainly worried about being lumbered with the blame. It has warned the Treasury and the Securities and Investments Board that urgent action needs to be taken to remove the roadblocks and "avoid discrediting the regulatory system."

Certainly there is a regulatory problem, here which stems from the fact that the PIA is still in large measure a self-regulatory organisation. It remains too close to the companies it monitors. Of the PIA's 21 board members, 10 are from the insurance industry. Joe Palmer, the PIA chairman, was actually chief executive of Legal & General when the company sold the 24,506 L&G pensions we list as due for priority assessment.

The PIA's poor record in squeezing compensation out of the insurers makes the strongest possible case for a regulator completely independent of its industry. Colette Bowe, the PIA chief executive, wants to adopt a "naming and shaming" strategy, by publishing the statistics. We do not yet know whether her board agreed the proposal, but today we have done our bit to help.