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Swiss firm fined over endowment sales
Winterthur Life UK, a unit of the Swiss banking giant Credit Suisse, has been fined £500,000 by the UK's financial watchdog for mis-selling endowment mortgages.
It is the first fine for endowment mis-selling that the Financial Conduct Authority (FSA) has imposed.
Winterthur has been ordered to pay the £500,000 fine as well as costs of £57,000 to the City regulator under a ruling announced on Tuesday.
Winterthur must pay total compensation of £10m to eligible customers.
About 10,000 policyholders, who were sold mortgage endowment policies between March 1998 and December 1999, should be in line for a payment.
While the FSA has taken action over endowments in the past, these have been restricted to pricing issues.
The FSA has also launched probes into a number of other companies.
Decisions will be expected in the near future - and even bigger fines can be expected, pensions experts say.
Winterthur stopped selling endowment policies in July 2000.
The problems relate to a system called Winteract, a computerised sales system which was used by Winterthur's advisers between March 1998 and December 1999 to generate recommendations for customers.
Its computerised questionnaire, known as the "Attitude Survey", was designed to establish a customer's attitude to risk.
But the FSA found major failings with the use of the system, including the fact that customers were not provided with a "clear written explanation of the reasons why a recommendation had been made".
Winterthur had also failed to monitor how suitable the recommendations generated by the Winteract system were for clients and did not monitor its staff properly.
Policyholders who have surrendered their policies could also be in line for compensation under the terms of the ruling.
Customers with policies that are affected will be contacted over the next 24 weeks by Winterthur.
Carol Sergeant, managing director for Regulatory Process and Risk at the FSA said: "Where consumers have suffered loss we want to see firms act quickly and decisively to put things right.
"The level of fine here reflects the fact that Winterthur has dealt with this problem quickly, openly and co-operatively."
Winterthur Life has set up a help line on 0800 1380290. It is open from 9am to 5pm, Monday to Friday.
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