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LSE listed insurer Prudential has responded to a fine and censure by the UK’s Financial Services Authority saying the “investigation was into past events and does not concern the current conduct of the management of the Prudential Group”.
Arguing that the “FSA accepts that Prudential did consider their obligations in forming their assessment in respect of informing the regulator” the company asserts that whilst the financial regulator “considers that the circumstances of these breaches are serious, the FSA does not consider they were reckless or intentional”.
Prudential agreed though to settle with the FSA “over issues relating to the attempt to acquire AIA, the Asian subsidiary of AIG, in early 2010”. The companies in the Prudential Group have also agreed to pay fines totalling £30 million, in respect of a decision by the FSA that it and the UKLA should have been informed earlier about Prudential’s contemplation of the potential transaction.
The Group Chief Executive, Tidjane Thiam, has also agreed to be censured in respect of a decision by the FSA that it should have been informed earlier.
The FSA had earlier fined insurer Prudential £30 million for breaching FSA Principles and UKLA Listing Principles. Relating to Prudential’s failure to inform the FSA at the appropriate time that it was seeking to acquire AIA, the Asian subsidiary of AIG, in early 2010 the FSA also has also censured Tidjane Thiam, Prudential’s Group Chief Executive.
The FSA argued that Prudential failed to deal with the authority in an “open and cooperative manner when it was seeking to acquire AIA in early 2010”, because it did not inform the FSA of the proposed acquisition until after it had been leaked to the media on 27 February 2010.
Further commenting on the FSA ruling Paul Manduca, the Chairman of Prudential plc, said that the company’s board had “decided to settle this matter in the best interests of the Group and all its stakeholders” and that they “wish to draw a line under the matter, and to ensure our constructive relationship with our regulators remains good”.
“Tidjane acted at all times in the interests of the Company and with the full knowledge and authority of the Board. The Board wishes to express its satisfaction that all parties have agreed to this settlement” Mr Manduca added.
“Prudential works hard to maintain close and positive relationships with its regulators and the Group’s relationship with the FSA continues to be good. The FSA has determined that it should have been informed earlier about the fact we were contemplating the AIA transaction and we regret, with hindsight, not so doing.
“Over the past three years, our successful business strategy, led by Tidjane, and fully supported by the Board, has delivered excellent results for customers, shareholders and employees. This was most recently demonstrated by our strong annual results for 2012.”
