FSA fines Lincoln Assurance £485,000

The Financial Services Authority fined Lincoln Assurance £485,000 yesterday for allowing its long-term savings policies to be mis-sold on its behalf.

The fine relates to 10-year endowment policies sold for Lincoln by the brokers City Financial Partners between 1998 and 2000.

Lincoln was responsible for the conduct of City Financial, and the FSA said a significant number of customers had lost out. Lincoln was found to have failed to make sure City Financial only sold the 10-year policies to people for whom they were suitable.

Many young, single customers were sold the inflexible plans, which had high early redemption penalties, when more flexible products should have been offered.

Lincoln offered to review the 28,000 policies sold between November 1993 and October 2000, when City Financial operated as its sales agent. Lincoln has set aside £8.8m in compensation for the 5,000 customers who have asked for reviews.

Carol Sergeant, managing director at the FSA, said: "It is a key requirement that recommended products must be suitable for the customer's individual circumstances. This fine demonstrates the seriousness with which we view breaches of this requirement." Without the co-operation of Lincoln, Ms Sergeant said the fine would have been far higher.

Michael Tallett-Williams, managing director of Lincoln Financial, said: "Lincoln has taken full responsibility for City Financial's failings and I regret that some of our customers were disadvantaged." The contract with City Financial was terminated in October 2000.