FSA fines Sun Life of Canada £600k for governance failings

The Financial Services Authority (FSA) has fined Sun Life Assurance Company of Canada (UK) Limited (SLOC UK) £600,000 for failings in the governance of its with-profits business.

According to the regulator, the design and operation of SLOC UK’s governance arrangements were “unclear and inadequate”, resulting in a high risk that policyholders’ interests weren’t protected properly.

Failings came to light following two significant transactions executed in 2008 and 2009 which impacted one of the firm’s with-profits funds, holding approximately 114,000 policies and £1.2 billion in assets.

Specifically, SLOC UK’s with-profits committee failed to adequately review the transactions and neither did its board of directors approve the transactions.

The FSA comments: “With-profits business allows firms considerable discretion in managing funds, which can give rise to potential unfair treatment of policyholders.

“It is critically important for firms running with-profits business to have in place clear and adequate governance arrangements.

“Independent challenge of management’s decisions is essential to ensure policyholders are fairly treated.”

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Category: Companies News, Financial Services Authority News, Insurance News