Standard Life fined £2m over pension fund

STANDARD Life has been fined £2.45 million for misleading customers over a fund sold as a cash product despite being more than 50 per cent invested in risky mortgage-backed securities.

The Financial Services Authority (FSA) penalty – its first significant fine of 2010 – came after the regulator found "serious systems and controls failings" that led to misleading marketing material for the Edinburgh-based firm's Standard Life Pension Sterling Fund.

The fund at one stage had 2.2 billion in assets under management and 98,000 customers.

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But by July 2007, the majority of funds under management were invested in mortgage-backed securities, which were the risky investments at the heart of the financial crisis.

The FSA said customers were exposed to a "risk of unexpected capital losses" after Standard Life Assurance failed to communicate how the fund's investment strategy had changed.