Royal & Sun Alliance fined £1.35 million over pensions review

“Systemic weaknesses” in internal controls across parts of its pension review up to August 2000 have cost the Royal & Sun Alliance a £1.35 million fine by the Financial Services Authority. R&SA group companies had already been fined £225,000 for deficiencies in their pension review process after a 1997 visit by the Personal Investment Authority’s (PIA) Pension Review Monitoring Division. In July and August 2000 the FSA returned to check on progress but found weak senior management controls over the review. In response to its criticisms, outside consultants were appointed and a major remediation project launched. The group’s cooperation, says the FSA, is reflected in the magnitude of the fine. The regulator notes however that without the original PIA investigation, R&SA may have missed up to 13,500 cases due for review (which accounted for some 23% of its total number of reviewable cases) and failed to pay corresponding compensation of more than £32 million. 5000 were Phase 1 cases; detected more than two years after the completion deadline of June 1998, they mean that R&SA will close its Phase 1 casebook more than four years late.