The UK Financial Services Authority (FSA) yesterday imposed a fine of £2.45 million ($3.99 million) on pension giant Standard Life Plc's wholly owned subsidiary, Standard Life Assurance Ltd (SLAL),for publishing misleading literature about one of its investment funds.
FSA said the firm had misled investors in its Pension Sterling Fund by saying that their money was in cash while it was mainly in much riskier "asset-backed" investments.
''Despite the majority of the Fund being invested in floating rate notes by July 2007, marketing material issued by the company referred to the Fund as being wholly invested in cash,'' FSA noted.
This resulted in a risk of unexpected capital losses being incurred for those customers invested in the Fund. TSA said in a press release.
The risk of unexpected consumer losses was demonstrated by the reduction in value of the Fund by 4.8 per cent (approximately £100 million) on 14 January 2009.
Although SLAL proactively paid a total of £102.7 million into the Fund to restore the value of the investors' holdings (to the position they would have been in prior to the fall in the unit price), FSA said the firm failed to ensure that there were proper systems and controls over the Fund.