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UPDATE 1-Aviva rules out "significant" action following UK annuity review
October 18, 2016 / 1:10 PM / in a year

UPDATE 1-Aviva rules out "significant" action following UK annuity review

(Adds analyst, detail, Prudential no-comment, shares)

LONDON, Oct 18 (Reuters) - Insurer Aviva said on Tuesday it did not expect to take “significant” action after Britain’s regulator said some firms needed to review their sales of annuities to ensure people got the right deal.

Rival Standard Life said on Monday it had been asked by the Financial Conduct Authority to look again at its sales after the regulator conducted an industry-wide review of sales practices.

The FCA carried out the review because it was concerned that people in ill health may not have been told about so-called enhanced annuities, which offer a higher annual income to those with lower life expectancy. It said it did not find an industry-wide problem with annuity sales.

“We welcome the announcement from the FCA,” a spokeswoman for Aviva said in an emailed statement to Reuters.

“Our work is primarily focused on supporting further future improvements to the market, rather than on retrospective action. We don’t anticipate having to take any significant retrospective action,” she said.

Legal & General, another rival, has also said it was “pleased” with the outcome of the review.

The FCA said after its review that some firms needed to look again at their sales of annuities from 2008 onwards and compensate people if they did not get the right deal.

Analysts at Jefferies estimated Standard Life would need to pay compensation of around 120 million pounds ($147 million) and also expects Prudential would have to pay compensation, estimating it at around 200 million pounds.

“The impact of any compensation ... is manageable,” they said in a note.

A Prudential spokesman declined to comment.

Standard Life’s shares dropped nearly 4 percent on Monday but were up 1.2 percent at 329 pence at 1227 GMT on Tuesday, in line with the FTSE 100 index. Aviva’s shares were up 0.16 percent at 439 pence. ($1 = 0.8150 pounds) (Reporting by Carolyn Cohn and Simon Jessop, editing by Sinead Cruise and Susan Fenton)

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