Sun Life fined £600,000 by FSA for poor management

FSA building
Image caption The FSA has been keen to improve the management of the opaque with-profits funds run by insurers

Life insurance company Sun Life of Canada has been fined £600,000 for poor management of its £1.2bn with-profits investment fund.

Its fund managers carried out two huge derivatives deals in 2008 and 2009, to stop the fund becoming insolvent if share prices fell further.

But the vitally important deals were carried out without the explicit approval of senior directors.

The FSA said the firm's supervision had been "unclear and inadequate".

The regulator did not dispute the merit of the two deals, which affected the investments of 114,000 life insurance and pension policies.

But it said the poor oversight by senior management had "led to an unacceptable risk that proper independent judgement would not be applied to the transactions".

Tracey McDermott, the FSA's director of enforcement at the FSA, said the firm had fallen below the required standards.

"Its with-profits committee and board, who had primary responsibility for the fair treatment of policyholders, were not adequately consulted on two significant transactions," she said.

"This was an unacceptable approach to protecting policyholders."

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