Lautro begins inquiry into Pru's pension sales methods

LAUTRO, the life assurance regulator, has launched an informal inquiry into pension-selling methods by Prudential, Britain's biggest insurer, writes Peter Rodgers. Until now the Pru has been uninvolved in the scandal.

A Lautro memo seen by the Independent says the Pru's compliance officer was told in writing in April that there would be a formal investigation. But 'as the result of a sharp telephone interchange' with Mick Newmarch, Prudential's chief executive, Kit Jebens, the Lautro head, changed this to an informal inquiry with the same terms of reference.

The memo says Mr Newmarch said a formal probe would have to be announced, and that Prudential's share price would fall.

By 24 June there was 'significant cause for concern that, although the Prudential's salesforce had generally followed the company's procedures, the practices in use did pose a risk and had, in a significant number of cases, caused actual harm to investors.'

The Pru said this did not contradict its statement in May denying a Lautro probe, because that referred to rumours that it had problems with training. A spokesman said Lautro had not led it to change its own view that compensation provisions were unnecessary. He added: 'No one at the Pru has seen or been made aware of the contents of the maliciously leaked Lautro memo.'