Jeff Salway: Embarrassing is the only word to sum up Aegon woe

Aegon UK hardly has its troubles to seek. The company is undergoing a thorough review and restructuring that will take 80m a year out of costs. Up to 600 jobs in Edinburgh alone will be axed over the course of the shake-up.

Now the Financial Services Authority has dealt its Scottish Equitable business an embarrassing penalty due to a series of administrative errors.

The FSA may have given Aegon a 30 per cent discount on the 2.8m fine for co-operating with the investigation, but the regulator's verdict left no doubt that the scale of the incompetence was serious.

There was criticism of the insurer for letting the situation develop over a period of several years during which a number of those entitled to redress passed away.

It picked out five issues it felt were typical of the problems within the firm, including failure to issue policy documents, incorrect pension payments and wrongly calculated rebates, costing policyholders millions.

Otto Thoresen, Aegon's chief executive, who has a first class degree in maths and statistics from Aberdeen University and trained as an actuary with Scottish Equitable, will doubtless be embarrassed by the findings.

Most damning is the time it took the company to identify the problems and to begin resolving them.

For instance, the firm knew in 2007 that a large number of customers had moved without informing it of their new address, dating back to the early eighties. The FSA described the efforts to track those customers down as "often sporadic and insufficiently effective".

It transpired that 200,000 customers had moved and not been located, although more than half have been traced in recent months.

Aegon also believes that the incorrect guaranteed minimum pension payments, highlighted by the FSA as one of the most grievous issues, were made because of an inaccurate spreadsheet used between 1999 and 2007.

The problem had to be brought to the firm's attention three years ago by a third party, summing up the extent of the failure in its systems and control procedures.

Other errors were identified at an earlier date without being properly tackled, which, given they concerned the calculation of rebates to which customers were entitled, is alarming. Projects were undertaken to address the issue in 2001, 2004 and 2007, ut their failure led to the problem being compounded, said the regulator.

It was only in autumn last year that it emerged that 7,000 pensioners had to be told their funds had been overvalued by up to a third because Aegon's systems failed to record when customers withdrew tax-free cash from their pensions.

These are not trivial transgressions, but serious errors that have caused thousands of pensioners unnecessary distress and left many at a financial disadvantage - not a good reward for years of saving into Scottish Equitable pensions.

Uncertain whether UK's shoppers will show true grit

Just how much the weather will disrupt Christmas shopping this year is a difficult call, though it's more likely to force shoppers to either delay the inevitable spending spree or make a quick dash to the shops before the next deluge of snow is forecast.

The big question is whether they will spend more or less, with one survey yesterday suggesting 73 per cent of us will be handing over an unwanted gift from previous years.

The bigger picture surveys point to a slight increase in sales volumes, though analysts believe the evidence is patchy and that in some regions shoppers are more nervous than last year because of the impending public sector cutbacks. Only the imminent rise in VAT may be persuading some to buy those big ticket items now rather than wait for the January sales.