The Canadian subsidiary of the U.K.’s Standard Life Assurance Co. has begun an investigation into allegations that it charged some policy holders “miscellaneous fees” without informing them.
The review goes back to 1988, and has already resulted in the reimbursement of about CAN$1 million (U.S $ 667,000) to 20 or more clients and the discharge of five employees for taking unauthorized commissions, Canada’s Financial Post reported.
A Company spokesman said that several memorandums had been circulated to Standard’s sales force ordering that all charges be fully revealed to policy holders, but that the practice may have continued in some instances.
Standard is also reviewing charges and fees made to certain clients, mainly corporations and wealthy individuals, who purchased participation bonus policies, which provide for the payment of income gains in exchange for higher premiums. Apparently Standard did not prepare a breakdown of the total income gain and charges made on these policies, which prevented clients from ascertaining their amount.
If it can be shown that Standard significantly overcharged its policyholders over the years in question, it “could cost the giant mutual insurer tens of millions of dollars in compensation claims,” according to the Financial Post.
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