The Financial Conduct Authority (FCA) today fined the company £23.9m for failing to explain to non-advised customers that they could get a better annuity deal by shopping around on the open market.

The firm also failed to ensure that documentation used by call handlers was appropriate and did not monitor calls with customers properly.

“Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“These are very serious breaches that caused harm to those customers. Prudential is now rightly focussed on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers.”

An annuity is a retirement income product that can be bought with a customer’s pension pot, and which pays them a regular income in return.

A customer requires accurate information when choosing an annuity, because it is a complex financial product and can affect a customer, and their dependants, for life, the FCA said.

This is especially so for non-advised sales, where the customer selects the annuity based on factual information and does not receive financial advice.

Where customers have health and lifestyle factors which may shorten their life expectancy, they may be eligible for an enhanced annuity.

The FCA said firms need to provide clear, fair and not misleading information about enhanced annuities to help the customer make an informed decision about which product to buy.

Prudential did not dispute the FCA’s findings and said it has already contacted the vast majority of potentially affected customers.