The Financial Services Authority (FSA) has fined Scottish Equitable, the Aegon's UK life and pensions business, £2.8m for causing significant consumer detriment through poor administrative procedures.
Scottish Equitable will pay consumer redress of about £60m, of which £30m will have been paid by the end of the year.
In 2009, Scottish Equitable informed the FSA that it had identified around 300 issues relating to problems in administering its policies. The total consumer detriment from the 300 issues identified by Scottish Equitable is estimated to be £60m.
Aegon said it is on target to resolve all five of the issues specifically examined by the FSA by the end of April 2011 and expects the bulk of the remainder of the program to be completed by the end of 2011.
According to the FSA, the Scottish Equitable will be undertaking a redress program to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions.
FSA said that the Scottish Equitable has already started to compensate consumers and will have paid £30m in redress by the end of 2010.
FSA managing director of enforcement and financial crime Margaret Cole said the redress package is significant news for the customers of Scottish Equitable.