Watchdog fines RSA ?950,000

Royal & SunAlliance was yesterday fined £950,000 for mis-selling mortgage endowments as the financial services authority continued its crackdown on companies giving home owners poor advice.

The insurance group was guilty of "serious" failings that "exposed a large number of customers to the possibility of loss", said the regulator.

RSA is the third firm to be fined for mortgage endowment mis-selling in four months and the FSA indicated there may be others to come. RSA has set aside £16m to compensate customers.

It is the latest blow for the company, which was ejected from the FTSE 100 this month, days after slashing its dividend payout.

Carol Sergeant of the FSA said this latest fine should leave companies "in no doubt of our commitment to tackle those firms who make unsuitable recommendations to their customers and to secure compensation for those who have lost out as a result".

Some RSA advisers had failed to stick to rules requiring them to recommend endowment policies only to people prepared to take the risk that their policy might not pay off their mortgage.

The fine relates to the period between January 1997 and July 1999, when RSA sold a total of 35,000 policies. During one 12-month period from July 1998 to June 1999 as many as 20% of all customers may have been sold unsuitable policies, said the regulator.

The company has set aside £11m for compensating mis-selling victims, though this could rise as the FSA has said those sold policies between 1988 and 2000 would receive redress "where appropriate".

RSA is also offering a further £5.6m in compensation to 1,779 people affected by a separate endowment failing. The FSA discovered that some of the company's advisers either ignored or were unaware of guidance that they were not to sell "short term" mortgage endowment policies - with a term of less than 25 years - unless the customer insisted.

Yesterday's fine comes less than two months after RSA joined other insurers in cutting the value of investments, reducing annual bonuses and payouts on maturing policies.

This is the FSA's second largest fine for endowment mis-selling. In 2002, insurer Abbey Life was fined a record £1m, and this month Prudential's Scottish Amicable arm was fined £750,000. Peter Hanby, RSA's UK life director, said: "The fine and actions relate to past shortcomings which we very much regret."

Other endowment fines

Royal Scottish Assurance£2mNovember 2000

Winterthur Life£500,000September 2001

Abbey Life£1mDecember 2002

Scottish Amicable£750,000March 2003