The fine reflects Premium Life's inability to correct failures in its sales methods, causing investors to lose money, despite being warned about them two years ago by Lautro.
Yesterday's penalty, to which must be added costs of pounds 21,500, tops the pounds 225,000 fine imposed on another company, Aegon Life, in March. Legal & General was fined pounds 180,000 in February.
Lautro is about to impose even heavier fines in the next few weeks. It is understood that some of the industry's household names are to be penalised.
Colin Hawtin, head of policy at Lautro, said: 'There will be several fines announced as a result of a second round of visits we have been carrying out among our members.'
Premium Life, which has about 30,000 policyholders and assets of pounds 100m, was the subject of a management buyout several years ago led by Kleinwort Benson, which now owns a big stake in it.
Lautro said that Premium Life, based in Haywards Heath, was first visited by its enforcement team in March and April 1992. Serious breaches in the company's internal procedures, dating back two years, were identified and action was specified to solve them.
'In March 1993, enforcement staff carried out a second inspection visit, which identified that Premium Life had not taken all the necessary actions to deal with the problems identified,' the Lautro statement added.
Areas of particular concern included the company's failure to monitor its appointed representatives - self-employed sales people who set up their own firms but only sell one company's insurance products.
Premium Life also failed to make sure these representatives were competent, of good character and that they followed a proper code of conduct when making sales. They had not been properly trained, Lautro said.
Premium Life's chief executive, Colvin Rae, said the company has appointed new training and competence managers and retrained all its staff and appointed representatives.
'Lautro is now completely satisfied with our training and competence schemes,' he said.
A spokeswoman for the company said that checks made on many thousands of policies showed that 22 investors had suffered financially. Total compensation paid to them amounted to about pounds 15,000. A number of contracts with appointed representatives had been terminated.Reuse content